Technical Bits: HUL forms a double bottom pattern

Leading FMCG company Hindustan Unilever Limited (HUL) after registering high of Rs. 1,847 in the second week of February entered into a downtrend and recorded series of lower high-low. 

As on March 25, 2019, the stock formed a swing low of Rs. 1,660 and formed a long-legged Doji, thereafter, the stock prices rebounded to touch levels of Rs. 1,721, however, the stock failed to hold on to higher levels and price attempt to return to the previous trend. But the bears were not able to push prices much lower and stock registered an almost identical bottom as on April 5, 2019. This resulted in the formation of a double bottom formation. A positive divergence was also spotted at the same time on the RSI. A positive divergence occurs when the price is making a lower low, while the RSI forms a higher low.

 Going ahead, it’s important for the stock to sustain and close above the neckline of the double bottom pattern which is placed in the region of Rs. 1,721-1,722. A sustainable move above the level of Rs. 1,721-1,722 is likely to open up gates for a further rally towards levels of Rs. 1,755. The stock is trading above its important long term moving average i.e. 200 EMA which is placed at levels of Rs. 1,673 and this can act as good support for the stock in the coming days.

 HUL is India’s largest Fast Moving Consumer Goods Company (FMCG). The company operates in various segments which include Home Care, Beauty & Personal Care, Foods & Refreshment and Water Purifier.