Alembic Pharmaceuticals forms bearish engulfing candle

Technically, the stock of the pharmaceutical company, Alembic Pharmaceuticals Ltd, had formed a hammer-like candlestick pattern as on weekend of March 27, 2020 and thereafter, bounced sharply up to its all time high level. However, on Tuesday, the stock has formed a bearish engulfing candlestick pattern on the daily time frame. The bearish engulfing candlestick pattern is considered to be a bearish reversal pattern and usually, occurs at the top of an uptrend.

Among the momentum indicators, the 14-period daily RSI has cooled off after touching the 75 zone and at present, its reading is 65.99. The daily stochastic has also given a bearish crossover, which indicates a further downside momentum.

Going ahead, the eight-day EMA is likely to act as an immediate support for the stock, which is currently quoting at Rs 713.80 level. While the zone of Rs 665-Rs 655 will be a major support for the stock since it is a confluence of upward sloping trendline support and 20-day EMA level. On the higher side, Monday’s session high of Rs 839 will be a major hurdle for the stock.

Alembic Pharmaceuticals Ltd engages in developing formulations and active pharmaceutical ingredients (API). The company focusses on anti-infective, analgesic and cough & cold therapies.

On Tuesday, the stock of Alembic Pharmaceuticals closed at Rs 762.40 per share, dipped by 6.79 per cent. The stock opened at Rs 832 per share and hit an intraday high of Rs 840.95 and a low of Rs 758.20 per share on BSE.