Jindal Poly Films forms dark cloud cover pattern

From the low of Rs 150, which was registered on March 25, 2020, the stock of Jindal Poly Films Limited has witnessed almost 250 per cent upside. The stock has relatively outperformed the frontline indices in the current leg of the upward rally as well as Nifty 500 with a decent margin.

Currently, the stock has formed a ‘dark cloud cover’ candlestick pattern on the daily timeframe, which suggests that the bears have put their foot in the door. The dark cloud cover is a bearish reversal candlestick pattern, which usually occurs when a bearish candle on day 2 opens above previous days’ close and closes below the middle of day 1’s candle. The rejection of the gap-up is a bearish sign itself but the retracement into the gains of the previous day's upmove makes even more bearish sentiment.

Among the momentum indicators, the 14-period daily RSI has cooled off after touching the zone of 80 and at present, its reading is 66.63. The RSI is trading below its 9-day average and it is in a falling mode, which indicates a further downside momentum. The fading momentum is also indicated by the MACD histogram that is declining since the last seven trading sessions.

Going ahead, if the stock slips below Friday’s session low of Rs 476.55 and trades convincingly below this level, then there is a high probability that Friday’s high point of Rs 525 would become a temporary top for the stock. 

On Friday, the stock of Jindal Poly Films closed at Rs 482.10 per share, dipped by 6.33 per cent. The stock opened at Rs 524.85 per share and hit an intraday high of Rs 525 and a low of Rs 476.55 per share on NSE.