Hero MotoCorp forms homing pigeon pattern

Considering the daily timeframe, the stock of Hero MotoCorp Limited has formed a bearish pin bar candlestick pattern as on October 16, 2020, and thereafter, witnessed a throwback. The throwback was nearly 18 per cent from the high of Rs 3,394.

However, the stock has formed a homing pigeon candlestick pattern on the daily timeframe. This signals the weakening of the short-term downtrend and may reverse to the upside after the confirmation candle. On Monday, the stock opened with a minor gap above Friday’s close within its real body. However, unlike the bullish harami pattern, it closed with a small body red candle.

Homing pigeon closely resembles the harami or inside day pattern, except the fact that both the bodies are red rather than opposite in colour. However, confirmation of the pattern is required on the third candle. The third candle has to close above the high of the first candle to trigger a buy signal, which is currently placed at Rs 2,928.50 level.

The indicators and oscillators are lying below 50 and tilted southward. The stochastic is in an extremely oversold zone but its reversal is yet to be confirmed. Further, there has been a bullish divergence between the daily stochastic and the stock price movement, which suggests a limited downside. 

Going ahead, it’s important for the stock to sustain and close above the first candle's high, which is placed at Rs 2,928.50. A sustainable move above the level of Rs 2,928.50 is likely to open up gates for further rally towards the levels of Rs 3,020, followed by Rs 3,090. While on the downside, Friday’s session low of Rs 2,787 is likely to act as short-term support.

On Monday, the stock of Hero MotoCorp closed at Rs 2,835.65 per share, surged by 1.28 per cent. The stock opened at Rs 2,888 per share and hit an intraday high of Rs 2,888 and a low of Rs 2,812 per share on NSE.