Kotak Mahindra Bank forms Dark Cloud Cover pattern

The stock of Kotak Mahindra Bank Limited has formed a Dark Cloud Cover candlestick pattern on the daily scale. Recently, the stock had given breakout of downward sloping trendline resistance at Rs 1,630 on December 02, 2019 and thereafter, the stock saw almost 5.52 per cent upward move in eight trading sessions.

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 up move makes an even more bearish sentiment.

Going ahead, if the stock slips below the Friday’s sessions low of Rs 1,687.25 and trades convincingly below this level, then there is a high probability that Thursday’s high point of Rs 1,720 would become a temporary top for the stock. Among the momentum indicators, the 14-period daily RSI cooled off after touching the 72 zones and, at present, it is quoting at 64.51. The RSI is trading below its 9-day average and it is in a falling mode, which indicates a further downside momentum. 

Moreover, the Ichimoku chart on the 30-minute time frame is clearly giving a negative view as it closed below the KS and TS lines. Another important aspect is that the KS line crossed under the TS line, which is also a bearish sign. 

On Monday, the stock of Kotak Mahindra Bank closed at Rs 1,691.50 per share, dipping by 1.40 per cent. The stock opened at Rs 1,716.20 per share and hit an intraday high of Rs 1,719 and a low of Rs 1,687.25 per share on NSE.