AU Small Finance Bank Ltd. (AUBANK) is described as having completed a cycle correction in wave II at 477.75, followed by a new bullish cycle in wave III. From 477.75, it formed an initial three-wave rise before entering a corrective phase labelled blue wave (4).
Blue wave (4) is presented as an expanding triangle, an Elliott Wave pattern. The triangle is said to have ended near 895.05, implying the consolidation phase may have finished.
The next expected move is a rise in wave 5, intended to complete black wave ((1)) within a larger upward sequence. A Fibonacci projection places a target near 1138.75, described as the 0.618 extension of wave (3).
A ceiling is set at 1322.35, because wave (3) is stated to be shorter than wave (1), meaning wave 5 should stay below 1322.35. A move above 1322.35 would break the rule that the third wave cannot be the shortest.
After price reaches the 1138.75–1322.35 zone, a correction in wave ((2)) is outlined. This pullback is described as possibly taking 3, 7, or 11 swings, while the broader structure remains valid above 477.75.
Looking back at the analysis from mid-2025, the expanding triangle pattern in AUBANK correctly signaled a strong upward move. We saw the stock break out from its consolidation near the 895 level and begin a significant rally through the end of the year. This rally was consistent with the start of a new impulsive wave.
The upward momentum was largely driven by solid fundamentals reported in late 2025, including a Q3 net interest income growth of over 22% year-over-year, which helped build investor confidence. The stock ultimately reached a high of around 1115 in late January 2026, falling just short of the minimum 1138 target before losing steam. This price action confirms the bullish pressure anticipated by the Elliott Wave structure.
Since the January peak, the stock has entered a period of consolidation and is now trading around the 1050 level. This pullback has caused implied volatility to decrease from the highs seen during the run-up, potentially making option premiums more attractive. Derivative traders should now assess whether this is a temporary pause before the next leg up or the start of a deeper correction.
For those who believe the uptrend will resume shortly, buying out-of-the-money call options for the April or May 2026 expiry could provide leveraged upside. For instance, call options with a strike price of 1100 would benefit significantly if the stock makes another attempt toward the 1138 target. This approach defines your risk to the premium paid for the options.
Alternatively, if we expect the stock to remain above a certain level but not necessarily rally immediately, selling put credit spreads is a viable strategy. A trader could sell the 1020 strike put and buy the 980 strike put for protection, collecting a net premium. This position profits if AUBANK stays above 1020 through the option’s expiration.
It remains important to manage risk, as a decisive break below the current consolidation low around 1010 would suggest the corrective phase is extending. While the long-term outlook from 2025 remains valid as long as the price is above 477.75, a near-term dip below this support could invalidate the immediate bullish setup. This would force a re-evaluation of any long positions.
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