Bajaj Finserv forms piercing line pattern

The stock of Bajaj Finserv Limited has recently given a breakdown of broadening formation, right-angled and ascending pattern. Thereafter, the stock has witnessed almost 2,295 points or 26 per cent downward move in seven trading sessions, which was beyond its broadening formation pattern target. However, on Friday, the stock formed a piercing line candlestick pattern on the daily time frame.

The piercing line candlestick pattern is a two candlestick pattern. The first candle is red, which supports the downtrend and the second one is a long green candle, which opens below the close of the previous candle and then, closes above the midpoint of the preceding red candle. This action causes a concern to the bears and ends up making a potential bottom.

The leading indicator, 14-period daily RSI is currently quoting at 27.06 and it is in oversold region. However, momentum oscillator stochastic has given a positive crossover and it is scaling up, indicating an upside momentum.

Ichimoku chart on 30-minute time frame is clearly giving a positive view as it closed above KS and TS lines. Another important aspect is that the KS line crossed above the TS line, which is also a bullish sign. 

Going ahead, the zone of Rs 6,800-Rs 6,524 is likely to act as a major support for the stock. On the higher side, any sustainable move above the level of Rs 7,885 is likely to open up gates for further rally towards the levels of Rs 8,175, followed by Rs 8,565.

On Friday, the stock of Bajaj Finserv closed at Rs 7,728 per share, surged by 3.90 per cent. The stock opened at Rs 6,800 per share and hit an intraday high of Rs 7,883.90 and a low of Rs 6,524.25 per share on NSE.