Cholamandalam Finance forms homing pigeon candle

The stock of Cholamandalam Investment & Finance Company Limited has formed a homing pigeon candlestick pattern on the daily timeframe. On Monday, the stock opened with a minor gap above Friday’s close within its real body. But unlike the bullish harami candlestick pattern, it closed with small body red candle. It signals the weakening of the short-term downtrend and may reverse to the upside after the confirmation candle.

Homing Pigeon closely resembles the harami or inside day pattern, except that the both bodies are red, rather than opposite in colour. However, the confirmation of pattern is required on the third candle, which needs to close above the high of the first candle to trigger a buy signal that is currently placed at Rs 145.80 level.

The indicators and oscillators are lying below 50 and tilted southward. The stochastic is in extremely oversold zone but its reversal is yet to be confirmed. Going ahead, it’s important for the stock to sustain and close above the first candle high that is placed at Rs 145.80 level. A sustainable move above the level of Rs 145.80 is likely to open up gates for further rally, towards the levels of Rs 160, followed by Rs 183.70. While on the downside, the zone of Rs 125.60-Rs 117.40 is likely to act as a major support.

On Monday, the stock of Cholamandalam Investment & Finance Company closed at Rs 134.30 per share, surged by 1.05 per cent. The stock opened at Rs 136.70 per share and hit an intraday high of Rs 140.60 and a low of Rs 132.90 per share on BSE.