GNA Axles forms record session count pattern; bulls may take a breather

The stock of GNA Axles had given a downward sloping trendline breakout on December 31, 2020, and thereafter, witnessed over 41 per cent upside in just nine trading sessions.  

During this northward journey, the stock has marked the sequence of higher highs & higher lows for nine consecutive trading sessions. It resulted in the formation of a bullish record session count candlestick pattern thereby, further suggesting that the bulls may take a breather.  

This is an extremely rare pattern and usually occurs at the top of an uptrend. Generally, we rely on the typical momentum indicators or oscillators for recognising an overbought and oversold condition of the stock. However, this Japanese candlestick pattern gives us a unique way to recognise the time when the momentum is about to wane out.  

The momentum indicators and oscillators are in an extremely overbought region. The 14-period RSI on the daily chart is currently quoting at 87.55 levels, which is the highest level since listing. The stochastic oscillator on the daily chart has given a bearish crossover in the overbought zone. Further, the negative divergence is clearly visible between the daily stochastic and the stock price movement, which suggests a limited upside.  

Considering all the above factors, Wednesday’s session is going to be an important one to watch out for the stock. Any sustainable move or close below the prior day’s low may trigger some profit booking.