J&K bank update. Since last couple of days news regarding dismissal of chief manager of J&K Bank has been floating around and a lot of investors were nervous about the impact it would have on stock price on Monday.
Today’s price action was a bit surprising. Initially stock price corrected to around 82-83 and then reversed and kept gaining strength and ultimately ended up going nearly 8% as compared to last close. So effectively today’s initial downmove proved to be a shakeout move and then stock rallied hard.
I had read somewhere, that when stock does not react too negatively to perceived bad news, the move in the opposite direction is usually very strong. (something similar to a failure pattern) Today’s move was an example in the extreme short term. We can use this kind of learning in situations where something similar happens on a longer term weekly or monthly time frame in positional trades. If something like this is kept at the back of the mind, it helps in future possible situations.
Attached chart shows a crossing of major previous resistance marked in earlier posted chart at 92. Next major resistance also is marked on charts. Ideal scenario would be consolidation at or around 92 for some time before next move to take out next resistance in zone of 112. But how things go is something not in our hands. We have to observe and see how it goes. As of now, uptrend remains strong.
