Tata Elxsi forms Three Outside Up pattern

The stock of Tata Elxsi Limited has formed Three Outside Up candlestick pattern on daily time frame. The Three Outside Up pattern is representing the confirmation of Bullish Engulfing candlestick pattern. It can only show the success of the forecast of the appropriate Engulfing pattern.

With this bullish formation, the stock has also managed to close above its weekly pivot on Monday. From the momentum indicators perspective, the leading indicator 14-period daily RSI has bounced back from 40-38 levels and it is about to exhibit a positive crossover. The daily stochastic oscillator is suggesting some bullish strength as %K is above the %D. Moreover, a positive divergence was also spotted at the daily time frame on the RSI, which indicates limited downside. A positive divergence occurs when the price is making a lower low, while the RSI forms a higher low.

Meanwhile, the Ichimoku chart on 60-minute time frame is clearly giving a positive view as it closed above the TS and KS lines. Another important aspect is the TS line crossed above the KS line, which is also a bullish sign.

Going ahead, if the stock sustains above Monday’s session high of Rs. 657 and trades convincingly above this level, then there is a high probability that previous week’s low point of Rs. 610 would become a temporary bottom for the stock.

On Monday, the stock of Tata Elxsi closed at Rs. 647.40 per share, up by 2.39 per cent. The stock had opened at Rs. 636.25 per share and hit an intraday high of Rs. 657.00 and a low of Rs. 628.60 per share on NSE.