JSW Steel forms the Dark Cloud Cover pattern

The stock of JSW Steel Limited has formed the Dark Cloud Cover candlestick pattern on the daily timeframe. The Dark Cloud Cover is a bearish reversal candlestick pattern, which usually occurs when a bearish candle on day 2, which 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 up move adds even more bearish sentiment.

Among the momentum indicators, the 14-period daily RSI cooled off after touching the 67 zones and, at present, it is quoting at 59.48. The RSI is trading below its 9-day average and it is in a falling mode, which indicates further downside momentum. Interestingly, the RSI has formed a double top pattern and in case it falls below 56 levels, expects a bearish move in the stock. Moreover, there has been a negative divergence between the daily stochastic and the stock price movement, which suggests limited upside.

Going ahead, the stock has immediate support in the zone of Rs. 248.70-245.30 as the short term 13-day EMA and 20-day EMA are placed in that region, while the major support is placed in the zone of Rs. 238-237 as it is the confluence of upward sloping trendline support and 50-day EMA level. While on the upside, Tuesday’s high of Rs. 262.80 will be a major hurdle for the stock.

On Tuesday, the stock of JSW Steel closed at Rs. 253.10 per share, dipped by 2.71 per cent. The stock opened at Rs. 261.25 per share and hit an intraday high of Rs. 262.80 and a low of Rs. 251.10 per share on NSE.