Technical Bits: Biocon forms bullish engulfing candle

The stock of Biocon Limited has formed a bullish engulfing candle on the daily scale. The bullish engulfing candlestick consists of two real bodies of opposite colours. 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.

Among the momentum indicators, the 14-period daily RSI is currently quoting at 39.56. The RSI is trading above its 9-day average and it is in rising mode, which indicates further upward momentum. The stochastic oscillator is also suggesting some bullish strength as %K is above the %D. Moreover, the positive divergence is clearly visible between daily RSI, daily stochastic and stock price movement, which suggests limited downside.

Going ahead, if the stock sustains above Friday’s session high of Rs. 234 and trades convincingly above this level, then there is a high probability that Friday’s lowest point of Rs. 217.05 would become a temporary bottom for the stock.

On Friday, the stock of Biocon closed at Rs. 232.50 per share, up by 4.00 per cent. The stock opened at Rs. 221 per share and hit an intraday high of Rs. 234 and a low of Rs. 217.05 per share on NSE.