Tata Power forms bullish engulfing pattern

The stock of Tata Power Company Limited has formed a bullish engulfing candlestick pattern on the daily scale. The reversal is justified with strong volumes. The bullish engulfing candlestick pattern consists of two real bodies of opposite colours, in which the second day’s body completely engulfs the previous day's body. A large bullish candle suggests that this was a sudden and decisive shift towards bullish sentiment.

Among the momentum indicators, the 14-period daily RSI is currently quoting at 25.28. The RSI is trading above its nine-day average and it is in rising mode, which indicates a further upward momentum. The daily stochastic has also given a positive crossover. Moreover, the positive divergence is clearly visible between daily stochastic and stock price movement, which suggests limited downside.

Going ahead, if the stock sustains above Thursday’s session high of Rs 41.35 and trades convincingly above this level then, there is a high probability that Thursday’s lowest point of Rs 33.85 would become a temporary bottom for the stock.

On Thursday, the stock of Tata Power Company Limited closed at Rs 41.20 per share, up by 8.71 per cent. The stock opened at Rs 36 per share and hit an intraday high of Rs 41.35 and a low of Rs 33.85 per share on NSE.