Emami forms bullish engulfing candle

The stock of Emami Limited has formed a bullish engulfing candle on the weekly time frame. The bullish engulfing candlestick pattern consists of two real bodies of opposite colours. The second day’s body completely engulfs the previous day's body. A large bullish candle suggests this was a sudden and decisive shift to bullish sentiment.

Along with this bullish formation, the stock has also managed to close above its weekly pivot and short-term moving averages, i.e. eight-day EMA and 13-day EMA. Among the momentum indicators, the 14-period daily RSI is currently quoting at 38.77. The RSI is trading above its nine-day average and it is in rising mode, which indicates a further upward momentum. The momentum indicator MACD line has crossed above the signal line, which resulted in the histogram turning positive. Moreover, a positive divergence was also spotted at the daily time frame on the RSI, which indicates a limited downside. A positive divergence occurs when the price is making a lower low, while the RSI forms a higher low.

Going ahead, if the stock sustains above Friday’s session high of Rs 184 and trades convincingly above this level then, there is a high probability that Monday’s lowest point of Rs 130.95 would become a temporary bottom for the stock.

On Friday, the stock of Emami Limited closed at Rs 181.95 per share, surged by 5.86 per cent. The stock opened at Rs 175 per share and hit an intraday high of Rs 184 and a low of Rs 167.20 per share on NSE.