ONGC forms identical three crows pattern

The stock of Oil & Natural Gas Corporation (ONGC) has formed an ‘identical three crows’ candlestick pattern on the daily timeframe. 

The identical three crows’ candlestick is a bearish reversal pattern. The pattern occurs when the bears overtake the bulls during three consecutive trading sessions. The pattern shows three bearish long body candles on the pricing chart with short or no shadows. This pattern usually indicates a weakness in an established uptrend as well as the potential emergence of a downtrend.    

Along with this bearish formation, the stock, after a span of almost 30 trading sessions, has closed below its crucial short-term moving averages i.e. 20-day EMA. Among the momentum indicators, the 14-period daily RSI has cooled off after touching the zone of 86-87 and at present, its reading is 53.61. The RSI is trading below its 9-day average and it is in a falling mode, which indicates a further downside momentum. Further, the stochastic oscillator is also suggesting a bearish momentum as the fast stochastic is trading below its slow stochastic line.  

Moreover, a negative divergence was also spotted at the daily timeframe on the RSI, which indicates a limited upside. A negative divergence occurs when the price is making a higher high, while the RSI forms a lower high.  

Going ahead, the stock has strong support in the zone of Rs 85.35-Rs 84.90 as it is the confluence of 50 per cent Fibonacci retracement level of its prior upward move (Rs 64.20-Rs 105.60) and 34-day EMA level. On the other hand, it is advisable to wait till the stock moves above the level of Rs 105.60 and creates any long positions.  

On Monday, the stock of Oil & Natural Gas Corporation Limited dipped by 9.24 per cent and closed at Rs 89.85 per share. The stock opened at Rs 98.90 per share and hit an intraday high of Rs 98.95 and a low of Rs 88.95 per share on NSE.