NCC forms Doji candle on the weekly scale

The stock of NCC Ltd had formed bearish engulfing candle as on weekend of April 5, 2019 and, thereafter, it marked a sequence of lower tops and lower bottoms and registered a low of Rs 90.85. At present, near the horizontal trendline support, the stock had formed a Doji candle on the weekly scale.

The Doji represents indecision in the stock. If the Doji forms in an uptrend or downtrend, this is normally seen as significant, as it is a signal that the buyers are losing conviction when formed in an uptrend and, conversely, it is a signal that sellers are losing conviction if Doji is seen in a downtrend.

Going ahead, the zone of Rs 98-Rs 99 will act as a crucial resistance for the stock as it is the confluence of downward sloping trendline resistance and the short term 20-day EMA and 50-day EMA. if the stock sustains above this region and trades convincingly above this zone, then there is a high probability that the current week’s low point of Rs 90.85 would become a temporary bottom for the stock. 

Among the momentum indicators, the 14-period daily RSI is currently quoting at 42.44 and it has recently given positive crossover. The fast stochastic is also trading above its slow stochastic line. Moreover, the positive divergence is clearly visible between daily stochastic and the stock price movement, which suggests limited downside.

On Friday, the stock of NCC Ltd closed at Rs 95.95, surging by 4.92 per cent. The stock opened at Rs 91.65 and hit an intra-day high of Rs 96.85 and a low of Rs. 91.65 on the NSE.