Praj Industries forms bullish engulfing candle

The stock of Praj Industries Ltd has formed a bullish engulfing candle on the daily scale. The bullish engulfing candlestick consists of two real bodies of opposite colour. The second day’s body completely engulfs the previous day's body. A large bullish candle suggests this was a sudden and decisive shift to bullish sentiment.

On Tuesday, the stock has managed to close above its weekly pivot and above its 200-day EMA. The leading indicator 14-period day RSI is currently quoting at 40.82 and it has recently given downward sloping trendline breakout. The fast stochastic line is also trading above its slow stochastic line. Moreover, the positive divergence is clearly visible between the daily RSI, daily stochastic and stock price movement, which suggest limited downside.

Going ahead, the zone of Rs 132-Rs 134 is crucial resistance for the stock as 20-day EMA and 100-day EMA are placed in that region. In case the stock sustains above this zone, there is a high probability that Tuesday’s low point of Rs 115.60 would become a temporary bottom for the stock.

On Tuesday, the stock of Praj Industries closed at Rs 127.85, a surge of 8.72 per cent. The stock opened at Rs 115.60 and hit an intra-day high of Rs 130.25 and a low of Rs. 115.60 on the NSE.