Mahanagar Gas forms double top pattern

The stock of Mahanagar Gas Limited has marked the low of Rs 663.90 as on March 19, 2020 and thereafter, entered into the uptrend and recorded series of higher highs and lows. On April 20, the stock has formed a swing high of Rs 986.85, where it has formed a reversal shooting star like candlestick pattern and thereafter, the stock prices fell to touch the level of Rs 890. However, the stock failed to sustain at lower level and the prices attempted to return to the previous trend but the bulls were not able to push the prices much higher and thus, the stock registered an almost identical top on April 29, 2020. This resulted in the formation of Adam & Adam double top pattern.

On Thursday, the stock has given a neckline breakdown of the double top pattern. This breakdown was confirmed by the above 50-day average volumes. Currently, the stock is trading below its weekly pivot and short-term moving averages, i.e. 20-day EMA, 50-day EMA, 100-day EMA and 200-day EMA. Interestingly, the daily RSI has also formed a double top pattern. The daily and weekly MACD stays bearish as it is trading below its zero line.

Going ahead, we expect the bias to remain negative as long as the stock sustains below Thursday’s high of Rs 907.65 level. On the downside, the level of Rs 826, followed by Rs 788 would be seen as the next support zone for the stock.

On Thursday, the stock of Mahanagar Gas closed at Rs 870.90 per share, down by 2.61 per cent. The stock had opened at Rs 894.25 per share and hit an intraday high of Rs 907.65 and a low of Rs 863.30 per share on NSE.