Technical Bits: MCX forms Bearish engulfing candle

The stock of Multi Commodity Exchange of India (MCX) has formed a Bearish engulfing candle on the daily time frame. The Bearish engulfing candlestick pattern is considered to be a bearish reversal pattern and usually occurs at the top of an uptrend.

Among the momentum indicators, the 14-period daily RSI cooled off after touching 60 zone and at present, its reading is 54.81. The RSI is trading below its 9-day average and it is in a falling mode, which indicates further downside momentum. The daily MACD stays bearish as it is trading below the zero line. The fast stochastic is also trading below its slow stochastic line. Moreover, the negative divergence is clearly visible between daily RSI, daily stochastic and stock price movement, which suggests limited upside.

Going ahead, if the stock slips below Tuesday’s session low of Rs. 845.40 and trades convincingly below this level, then there is a high probability that Tuesday’s high point of Rs. 896 would become a temporary top for the stock.

On Tuesday, the stock of Multi Commodity Exchange of India closed at Rs. 856.95 per share, dipping by 2.30 per cent. The stock opened at Rs. 879 per share and hit an intraday high of Rs. 896 and a low of Rs. 845.40 per share on NSE.