Technical Bits: LTTS forms bearish engulfing candle

The stocks of L&T Technology Services Ltd has formed a bearish engulfing candle on a daily scale after touching horizontal trendline resistance, which indicates bears are taking control near the short term resistance. The Bearish Engulfing Candlestick Pattern is considered to be a bearish reversal pattern and usually occurs at the top of an uptrend.

L&T Technology's Relative Strength Index (RSI) is cooled after touching the overbought region and at present, its reading is 57.27 level. The RSI is trading below its 9-day average and it is in falling mode, which depicts further downward momentum. The daily MACD stays negative as it is trading below the zero line. Moreover, the negative divergence is clearly visible between daily stochastic and stock price movement, which suggests limited upside.

Going ahead, if the stock slips below Friday’s session low of Rs. 1,672.50 and trades convincingly below this level, then there is a high probability that Friday’s high point of Rs. 1,780 would become a temporary top for the stock.

On Friday, the stock of L&T Technology Services closed at Rs. 1,678 per share, dipped by 5.14 per cent. The stock opened at Rs. 1,779 per share and hit an intraday high of Rs. 1,780 and a low of Rs. 1,672.50 per share on NSE.