HDFC Life Insurance Company forms double bottom pattern
The stock of HDFC Life Insurance Company Limited formed a shooting star-like candlestick pattern as of November 25, 2020, and thereafter, witnessed a correction. As of December 03, 2020, the stock had formed a swing low of Rs 625, where it formed a reversal bullish engulfing candlestick pattern and thereafter, the stock prices rebounded to touch the level of Rs 668.35. However, the stock failed to sustain at higher levels and again witnessed a correction but the bears were not able to push the prices much lower, and thus, the stock registered an almost identical bottom as of December 21, 2020. This resulted in the formation of Adam & Adam double bottom pattern.
On Monday, the stock had given a breakout above the neckline of a double bottom formation. This breakout is confirmed by the above 50-day average volume. Additionally, the stock had formed a sizeable bullish candle on the breakout day, which adds further strength to the breakout.
The major trend of the stock is bullish as it is trading above its weekly pivot and above its long and short-term moving averages, i.e. 20-day, 50-day, 100-day & 200-day EMAs and these moving averages are exactly in ascending order, which suggests that the trend is strong.
Talking about indicators, the 14-period daily RSI is currently quoting at 64.46. The RSI is trading above its 9-day average and it is in a rising mode. The stochastic is also suggesting a bullish momentum as the fast stochastic is trading above its slow stochastic line. On the daily timeframe, ADX is 16.99 and suggests that the trend is yet to be developed. Directional indicators continue in the ‘buy’ mode as +DI continues above –DI.
Going ahead, the 20-day EMA is likely to act as strong support for the stock, which is currently placed at Rs 650 level. On the upside, the zone of 715-720 will be a major hurdle for the stock.
On Monday, the stock of HDFC Life Insurance Company surged by 3.26 per cent and closed at Rs 678.70 per share. The stock opened at Rs 661.85 per share and hit an intraday high of Rs 680 and a low of Rs 657.70 per share on NSE.