Bajaj Auto forms Descending Hawk pattern

The stock of Bajaj-Auto Limited has formed Descending Hawk candlestick pattern on daily time frame. The Descending Hawk pattern closely resembles the Bearish Harami or Inside Day pattern, except in Descending Hawk pattern both the bodies are green rather than opposite in colour. The pattern may indicate that there is a weakening of the current uptrend, which increases the likelihood of reversal. However, the confirmation of pattern is based on the position of third candle. To trigger a sell signal, the third candle has to close below the low made by the first candle, which is currently placed at Rs. 2745.50 level.

From the momentum indicators perspective, the 14-period RSI has cooled off after touching 64 level and at present its reading is 60.45. The daily MACD stays bearish as it is trading below its zero line since last seven trading sessions.

Going ahead, it’s important for the stock to sustain and close below the first candle’s low which is placed at Rs. 2745.50. A sustainable move below the level of Rs. 2745.50 is likely to open up gates for further correction towards levels of Rs. 2685 level, followed by Rs. 2640 level. While on the upside, the Friday’s high of Rs. 2864.80, followed by Rs. 2928, would be seen as the next resistance zone for the stock.

On Monday, the stock of Bajaj-Auto closed at Rs. 2810 per share, dipped by 1.03 per cent. The stock opened at Rs. 2809 per share and hit an intraday high of Rs. 2838.55 and a low of Rs. 2797 per share on NSE.