Axis Bank is currently trading at 1,365.70. Over the past few months, the price action has started to tighten significantly, moving into a well-defined technical range. By studying the chart structure and momentum, we can map out the two most likely paths ahead without bias.
The Chart Pattern: A Contracting Triangle
The structure starting from the peak of 1,418.30 looks like a classic contracting triangle. This pattern consists of five waves (A-B-C-D-E) that reflect a balance between buyers and sellers as volatility shrinks.
By connecting the lows of Wave A and Wave C, we get a upward-sloping support line. This gives us a clear geometric boundary for the bottom half of the pattern.
The Momentum Signal: RSI Divergence
The Daily RSI is currently reading 68.33, which is near the overbought boundary.
Looking closely at the indicator, the RSI has printed a higher high compared to its peak during Wave B. However, the actual stock price has printed a lower high (1,378.00 versus 1,391.00). This setup is known as a hidden bearish divergence. It tells us that the market is using a lot of momentum to push the price up, yet it is still failing to cross the previous highs. This often warns that the upward move is getting tired near major resistance.
Primary Scenario: The Wave E Pullback
Because the price is meeting the upper trendline resistance and showing momentum exhaustion, the primary expectation is a near-term rejection.
If the 1,378.00–1,391.00 resistance zone holds, the price will likely turn down to form the final leg of the triangle, Wave E. This downward move is expected to find support along the lower ascending trendline, roughly around the 1,280.00–1,300.00 area. A successful hold there would complete the triangle and set up the foundation for a larger upward breakout later on.
Alternative Scenario and Key Invalidation
Markets can surprise us, so it is vital to know when a chart pattern is no longer valid.
If buyers find strong volume and push the price cleanly out of the top of the triangle, our expectation of a pullback changes. A daily candlestick close above 1,391.00 invalidates the contracting triangle pattern. Crossing this level means the corrective phase likely ended early at the Wave C low, opening the door for the stock to immediately test the major structural high at 1,418.30.
Summary of Key Levels to Watch
Disclaimer: This post is for educational purposes only and is not financial advice. I am not a SEBI-registered analyst. Please do your own research and manage your risk carefully.
The Chart Pattern: A Contracting Triangle
The structure starting from the peak of 1,418.30 looks like a classic contracting triangle. This pattern consists of five waves (A-B-C-D-E) that reflect a balance between buyers and sellers as volatility shrinks.
- Wave A dropped to a low of 1,150.30.
- Wave B rallied to a lower high of 1,391.00.
- Wave C formed a higher structural low at 1,222.10.
- Wave D is currently testing the upper descending resistance line near 1,378.00.
By connecting the lows of Wave A and Wave C, we get a upward-sloping support line. This gives us a clear geometric boundary for the bottom half of the pattern.
The Momentum Signal: RSI Divergence
The Daily RSI is currently reading 68.33, which is near the overbought boundary.
Looking closely at the indicator, the RSI has printed a higher high compared to its peak during Wave B. However, the actual stock price has printed a lower high (1,378.00 versus 1,391.00). This setup is known as a hidden bearish divergence. It tells us that the market is using a lot of momentum to push the price up, yet it is still failing to cross the previous highs. This often warns that the upward move is getting tired near major resistance.
Primary Scenario: The Wave E Pullback
Because the price is meeting the upper trendline resistance and showing momentum exhaustion, the primary expectation is a near-term rejection.
If the 1,378.00–1,391.00 resistance zone holds, the price will likely turn down to form the final leg of the triangle, Wave E. This downward move is expected to find support along the lower ascending trendline, roughly around the 1,280.00–1,300.00 area. A successful hold there would complete the triangle and set up the foundation for a larger upward breakout later on.
Alternative Scenario and Key Invalidation
Markets can surprise us, so it is vital to know when a chart pattern is no longer valid.
If buyers find strong volume and push the price cleanly out of the top of the triangle, our expectation of a pullback changes. A daily candlestick close above 1,391.00 invalidates the contracting triangle pattern. Crossing this level means the corrective phase likely ended early at the Wave C low, opening the door for the stock to immediately test the major structural high at 1,418.30.
Summary of Key Levels to Watch
- Current Price: 1,365.70
- Immediate Overhead Resistance: 1,378.00 – 1,391.00
- Expected Support Zone (Wave E): 1,280.00 – 1,300.00
- Pattern Invalidation Level: A daily close above 1,391.00
Disclaimer: This post is for educational purposes only and is not financial advice. I am not a SEBI-registered analyst. Please do your own research and manage your risk carefully.
WaveXplorer | Elliott Wave insights
📊 X profile: @veerappa89
📊 X profile: @veerappa89
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
WaveXplorer | Elliott Wave insights
📊 X profile: @veerappa89
📊 X profile: @veerappa89
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.