HCL Tech forms Three Black Crows pattern

The stock of HCL Technologies Limited has formed the Three Black Crows candlestick pattern on daily time frame. The Three Black Crows candlestick pattern is a bearish reversal candlestick pattern.

The pattern occurs when bears overtake the bulls during three consecutive trading sessions. The pattern shows on the pricing chart as three bearish long body candles with short or no shadows. This pattern usually indicates a weakness in an established uptrend and the potential emergence of a downtrend.

The short term trend is bearish, as the stock is trading below its weekly pivot and below the short term moving averages, i.e. 13-day EMA and 20-day EMA. Among the momentum indicators, the 14-period daily RSI is currently quoting at 51.08 and it is trading below its 9-day average. The stochastic oscillator is also suggesting some bearish momentum as %K is below the %D. The daily MACD stays bearish as it is trading below its zero line.  Moreover, there has been a negative divergence between the daily RSI, daily stochastic and the stock price movement, which suggests limited upside.

In the near-term, the zone of Rs. 1063-Rs. 1050 is likely to act as major support as the long-term moving average 100-day EMA and recent swing low is placed in that region. Failure to hold this support would lead to further correction up to the level of Rs. 990. While on the upside, previous week’s high of Rs. 1130.60 will be a major hurdle for the stock.

On Monday, the stock of HCL Technologies closed at Rs. 1084.15 per share, dipped by 1.58 per cent. The stock opened at Rs. 1100.0 per share and hit an intraday high of Rs. 1100.00 and a low of Rs. 1081.00 per share on BSE.