Equitas Holdings forms a double bottom pattern

The stock of Equitas Holdings Ltd., after registering a high of Rs. 143.65 in the second week of June, had entered into a downtrend and recorded series of lower high-low. As on August 05, 2019, the stock had formed a swing low of Rs. 97.75 and thereafter, the stock prices rebounded to touch the level of Rs. 113.40. However, the stock failed to hold on to higher levels and all its attempts to return to the previous trend failed. But the bears were not able to push prices much lower and the stock registered an almost identical bottom as on August 23, 2019. This resulted in the formation of Adam and Adam double-bottom pattern.

On Thursday, the stock has given breakout above the neckline of double bottom formation, backed by relatively higher volumes. Additionally, the stock formed a sizeable bullish candle on breakout day, which adds strength to the breakout. The short term trend of stock is bullish as it is trading above its weekly pivot and above the short term moving averages, i.e. 13-day EMA, 20-day EMA and 50-day EMA. The leading indicator 14-period RSI is currently quoting at 57.27 and it is trading above its 9-day average. The fast stochastic line is also trading above the slow stochastic line. The daily MACD stays bullish as it is trading above the zero line. The histogram is suggesting that the upward momentum is picking up.

Going ahead, we expect the bias to remain positive as long as stock sustains above the Thursday’s low of Rs. 108.55 level. On the higher side, the level of Rs. 118.75, followed by Rs. 123.90, would be seen as the next resistance zone for the stock.

On Friday, the stock of Equitas Holdings Ltd closed at Rs. 116 per share, up by 1.65 per cent. The stock had opened at Rs. 115.80 per share and hit an intraday high of Rs. 117.45 and a low of Rs. 113.85 per share on BSE.