DMart forms bearish engulfing candlestick pattern

The stock of Avenue Supermarts Limited forms a bearish engulfing candlestick pattern of the daily time frame. The bearish engulfing candlestick pattern is considered to be a bearish reversal pattern and usually, occurs at the top of an uptrend.

Along with this bearish formation, the stock has also managed to close below its weekly pivot. Among the momentum indicators, the leading indicator, 14-period daily RSI, cooled off after touching the 65-70 zones and its reading is 57.54, at present. The RSI is trading below its 9-day average and it is in a declining mode, which indicates further downside momentum. The stochastic oscillator is also suggesting some bearish momentum as per cent K is below the per cent D. Moreover, on a daily time frame, the Know Sure Thing (KST) has given bearish crossover. 

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

Going ahead, if the stock sustains below the Monday’s session low of Rs 1,927 and trades convincingly below this level then, there is a high probability of Monday’s high point of Rs 2,004.45 becoming a temporary top for the stock.

On Monday, the stock of Avenue Supermarts closed at Rs 1,928 per share, dipped by 3.14 per cent. The stock opened at Rs 2,000 per share and hit an intraday high of Rs 2,004.45 and a low of Rs 1,927 per share on NSE.