Bharat Electronics forms bullish engulfing candle

The stock of Bharat Electronics Limited has given a downward sloping trendline breakout as on June 19, 2020 and thereafter, witnessed almost 36 per cent upside. After registering the high of Rs 105.40 on July 08, 2020, the stock has witnessed a minor correction. During this corrective phase, the volume was mostly below the 50-day average, which suggests its routine decline after a robust move.

The correction is arrested near 23.6 per cent Fibonacci retracement level of its prior upward move (Rs 57.75- Rs 105.40), which coincides with the short-term 13-day EMA level. Additionally, the stock has formed a reversal bullish engulfing candlestick pattern on the daily timeframe. This suggests that the bulls are taking control near the medium-term support.

Further, the 14-period RSI on the daily timeframe is in bullish territory. Interestingly, in the recent corrective phase, the RSI never breached its 60-mark, which indicates that the stock is in a super bullish range as per RSI range shift rules. Currently, the stock is trading above its short and long-term moving averages. Moreover, the bullish crossover on the stochastic oscillator supports the overall bullish structure.

Going ahead, if the stock sustains above Friday’s session high of Rs 98.45 and trades convincingly above this level, then there is a high probability that Friday’s lowest point of Rs 94.05 would become a temporary bottom for the stock.

On Friday, the stock of Bharat Electronics closed at Rs 98 per share, surged by 3.76 per cent. The stock opened at Rs 94.40 per share and hit an intraday high of Rs 98.45 and a low of Rs 94.05 per share on NSE.