Pidilite Industries form bearish engulfing pattern

The stock of Pidilite Industries Limited formed a bearish engulfing candlestick pattern on the weekly time frame. The bearish engulfing candlestick pattern is considered to be a bearish reversal pattern and usually, occurs at the top of an uptrend.

Along with this bearish formation, the stock has also managed to close below its weekly pivot and short-term moving averages, i.e. 20-day EMA and 50-day EMA. Among the momentum indicators, the 14-period daily RSI has cooled off after touching the 75 zone and at present, its reading is 44.81. The RSI is trading below its nine-day average and it is in falling mode, which indicates a further downside momentum. The daily stochastic has also given a bearish crossover.

It has also given the sell signal in Martin Pring’s long-term KST set up. Moreover, a negative divergence was also spotted at the daily and weekly time frame on the 14-period RSI. A negative divergence occurs when the price is making a higher high while, the RSI forms lower high.

Going ahead, the stock has a support in the zone of Rs 1,380-Rs 1,355 as it is the confluence of upward sloping trendline support and long-term moving averages, i.e. 200-day EMA. While on the upside, Wednesday’s high of Rs 1,709.90 will be a major hurdle for the stock.

On Friday, the stock of Pidilite Industries closed at Rs 1,524.70 per share, dipped by 4.29 per cent. The stock opened at Rs 1,549.70 per share and hit an intraday high of Rs 1,569 and a low of Rs 1,425 per share on BSE.