TCS forms Three Black Crows pattern

The stock of Tata Consultancy Services Limited has formed the Three Black Crows candlestick pattern on weekly time frame. The Three Black Crows candlestick pattern is a bearish reversal candlestick pattern. The pattern occurs when bears overtake the bulls during three consecutive trading sessions. The pattern shows on the pricing chart as three bearish long body candles with short or no shadows. This pattern usually indicates a weakness in an established uptrend and the potential emergence of a downtrend.

Along with this bearish formation, the stock has also given breakdown of upward sloping trendline support formed by connecting swing lows from November 2018. This breakdown was confirmed by the above 50-week average volumes. The short and long term trend is bearish, as the stock is trading below its weekly pivot and below the long-short term moving averages, i.e. 20-day EMA, 50-day EMA, 100-day EMA and 200-day EMA. The 14-period weekly RSI is currently quoting at 45.28 and it has recently given breakdown of upward sloping trendline support. The weekly MACD stays bearish as it is trading below its zero line since last 13 weeks. Moreover, the negative divergence is clearly visible between weekly RSI, weekly stochastic and stock price movement, which suggests limited upside.

Going ahead, the stock has strong support in the zone of Rs. 2000-1950, while, on the higher side, the major resistance is placed in the zone of Rs. 2130-2170 level.

On Friday, the stock of Tata Consultancy Services closed at Rs. 2065.60 per share, down by 1.74 per cent. The stock had opened at Rs. 2102.50 per share and hit an intraday high of Rs. 2129.25 and a low of Rs. 2055.60 per share on BSE.