Has YES Bank Bottomed?

Banking stocks are the flavour of this quarter as the Bank Nifty index has gained over 13% and is trading at an all-time high.

Yes Bank, the investor's favourite in 2015-2016 had lost its mojo after the fall in 2018-2020. It was one of the popular stocks that turned into penny stocks.

The stock lost 98% from its all-time high of Rs 398.55 in 2018 to the low of Rs 5.65 during the pandemic.

It's been the broken love for traders and investors, but they just can't stop investing in the stock. That's why we say emotions drive the markets.

A sudden spike in Yes Bank has attracted investors of late and they now believe the worst is over for the bank.

Are you thinking this too?

Well, I have no idea whether the worst is over or if it's the new beginning for the stock trend, but the charts don't confirm that the stock price has bottomed out.

YES Bank Weekly Price Chart

 

Historically, the rally has been short-lived with this momentum play.

Since it's low in 2020, the stock has been trending in the range of Rs 10-20. The rally of a few weeks fizzles out over the next few months and the stock corrects to lower levels.

The stock rallied by 53% in July 2020 from Rs 11 to Rs 17 and corrected back to Rs 12.20.

Similarly, the rally of 69% followed by rallies of 44%, 36% and 46% witnessed the same pump-and-dump trend.

As banking stocks are trending, Yes Bank is now starting its bullish momentum again. This time, it is up by 50% in the recent leg and a similar story of the pump-and-dump can be repeated.

The only thing for the bulls here is the higher high - higher low structure as per Dow Theory.

Additionally, the golden cross on daily charts is the icing on the cake for bulls.

The long-term chart has everything for bears.

1. The history of the pump-and-dump.
2. The volumes signal the story of pumping the stock to trap retailers.
3. Multiple resistance at horizontal trendline.
4. The stock has not crossed 200WEMA since 2019.

The stock price seems to be trending bullish along with the market sentiments but how long can it go?

As we say in technical analysis, history repeats itself. If the history of the pump-and-dump proves to be right again, a markdown can be on cards for the stock.

The chart suggests a 50-50 chance for bulls and bears and it is very difficult to consider this as the bottom for the stock price.

I will take this as the momentum play and avoid considering as the long term pick due to its historical trend.

For investment, I would prefer the banking stocks which are trading at all-time high and outperforming the sectorial index.

For a fundamental analysis of Yes Bank, check out the editorial we did a couple of months ago - Is it Time to Say "YES" to this Bank?

I'll share more on his trend on my Telegram group. If you're interested in being part of my charting journey as I share how to create wealth from profitable trade setups, join my telegram channel - Fast Profits Daily.

In the meantime, also check out the below video where I explain why the Bank Nifty index could be a prime candidate for a Santa Claus rally.

Investment in securities market are subject to market risks. Read all the related documents carefully before investing


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Brijesh Bhatia Research Analyst and expert chartist, is the editor of Alpha Wave Profits. Fully committed to his craft, Brijesh has mastered the art of making money by trading using technical analysis. Brijesh has an MBA from ICFAI and 16 years of experience in India's financial markets. He began his career on Dalal Street as commodities dealer and it wasn't long before he developed his own unique trading system. Brijesh worked on his trading system until it could be expected to deliver 5 units of return for every unit of risk.

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1 Responses to "Has YES Bank Bottomed?"

Pratyush A Naik

Dec 13, 2022

Very difficult to say, but short term bullish momentum is in place , FOMO is also governing. And as per chart likely to test Rs 10.72 level for confirmation of bottom out.

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