FMCG index reverses from all-time high, Bearish Engulfing seen

After hitting all-time high levels, Nifty FMCG index witnessed profit booking in Friday’s trade, registering more than 1 per cent loss as of 14:33 hours.

ITC which holds nearly 42 per cent in Nifty FMCG index and which is also a part of benchmark Nifty 50, tumbled 2.5 per cent dragging the index downwards. The stock has retreated after resisting for four consecutive trading sessions on a closing basis at 61.8 per cent of the retracement level of the downward rally from 289 to 259. The turnaround is supported by rising volumes and 14-period RSI negative crossover.

Coming back to Nifty FMCG index, after taking crucial support at multiple support zone of 28,100-28,200, which was also its 50-day EMA support level, the index surged consistently. Thereafter, the index hit a kind of multiple resistance at 29,150 levels, the index hit higher highs for 7 consecutive days since July 5, out of which on 5 days, the index closed in green.

On Friday, the index had formed a kind of Bearish Engulfing pattern which if confirmed on Monday’s trade can give some more downside in the sessions to come. The reversal is supported by rising volumes and 14-period RSI negative crossover. Even on the weekly time frame, the index traded higher for three consecutive weeks and has Doji pattern in the making.