Caplin Point Laboratories forms bearish engulfing candle

The stock of Caplin Point Laboratories Limited formed a bearish engulfing candlestick pattern on the daily timeframe. The bearish engulfing candlestick pattern is considered to be a bearish reversal pattern and usually occurs at the top of an uptrend. The reversal is further justified with the above 50-day average volume.

Among the momentum indicators, 14-period daily RSI cooled-off after touching the extreme overbought zone of 90, and at present, its reading is 77.44. The RSI is trading below its 9-day average and is in a declining mode, which indicates a further downside momentum. The stochastic has also given a bearish crossover. Moreover, there has been a negative divergence between the daily RSI, daily stochastic, and the stock price movement, suggesting a limited upside.

Going ahead, if the stock sustains below Friday’s session low of Rs 575 and trades convincingly below this level then, there is a high probability of Friday’s high point of Rs 686 becoming a temporary top for the stock.

On Friday, the stock of Caplin Point Laboratories closed at Rs 585.55 per share, dipped by 7.03 per cent. The stock opened at Rs 645 per share and hit an intraday high of Rs 686 and a low of Rs 575 per share on NSE.