Coal India forms bullish engulfing candle

The stock of Coal India Limited has formed a bullish engulfing candlestick pattern on the daily timeframe. The bullish engulfing candlestick pattern is considered to be a bullish reversal pattern and usually occurs at the bottom of a downtrend. The reversal is further justified with strong volumes.

Along with this bullish formation, the stock has also managed to close above its short-term moving averages, i.e. 13-day EMA and 20-day EMA level. Among the momentum indicators, the 14-period daily RSI, is currently quoting at 51.45 and bounced exactly from 40-42 zone. The RSI is trading above its nine-day average and it is in a rising mode, which indicates a further upward momentum. The daily stochastic has also given a positive crossover. Moreover, the positive divergence is clearly visible between daily RSI and stock price movement, which suggests limited downside.

Going ahead, if the stock sustains above Thursday’s session high of Rs 139.70 and trades convincingly above this level then, there is a high probability that Thursday’s lowest point of Rs 128.15 would become a temporary bottom for the stock.

On Thursday, the stock of Coal India closed at Rs 137.60 per share, surged by 6.30 per cent. The stock opened at Rs 129 per share and hit an intraday high of Rs 139.70 and a low of Rs 128.15 per share on NSE.