InterGlobe Aviation forms three outside down pattern

The stock of InterGlobe Aviation Limited has given a downward sloping channel breakout as on June 3, 2020 and thereafter, bounced sharply up to the level of Rs 1,210. However, considering the daily timeframe, the stock has formed ‘three outside down candlestick pattern’, which is representing the confirmation of bearish engulfing pattern and can only show the success of the forecast of appropriate engulfing pattern.

With this bearish formation, the stock has also managed to close below its weekly pivot and long-term moving average, i.e. 100-day EMA. Among the momentum indicators, the 14-period daily RSI cooled-off after touching the zones of 70-72 and at present, it is quoting at 57.05. The RSI is trading below its nine-day average and it is in a falling mode, which indicates a further downside momentum. The stochastic oscillator has also given a bearish crossover. Moreover, the negative divergence is clearly visible between the daily RSI, daily stochastic and the stock price movement, which suggests a limited upside.

Going ahead, if the stock sustains below Tuesday’s session low of Rs 1,071.40 and trades convincingly below this level then, there is a high probability of Monday’s high point of Rs 1,210, becoming a temporary top for the stock.

On Tuesday, the stock of InterGlobe Aviation closed at Rs 1,080.35 per share, dipped by 3.31 per cent. The stock opened at Rs 1,121 per share and hit an intraday high of Rs 1,135 and a low of Rs 1,071.40 per share on NSE.