Technical Bits: Oriental Bank forms bullish engulfing candle

The stock of Oriental Bank of Commerce after registering high of Rs. 118.95 in the first week of April entered into a downtrend and recorded series of lower high-low. As on May 16, 2019, the stock formed a swing low of Rs. 87.70 and formed a reversal hammer like candlestick pattern, thereafter, the stock prices rebounded to touch levels of Rs. 106.50, 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 June 13, 2019. This resulted in the formation of a double bottom pattern.

Additionally, on Tuesday, the stock had formed bullish engulfing candle on the daily time frame. The bullish engulfing candlestick pattern is considered to be a bullish reversal pattern and usually occurs at the bottom of a downtrend.

From a momentum oscillator perspective, the 14-period daily RSI is currently quoting at 45, and it has recently given positive crossover. The stochastic oscillator is also suggesting some bullish strength as %K is trading above the %D.

Going ahead, the stock needs to sustain above the zone of Rs. 93.75-Rs. 94 for the bullish momentum to continue. On the downside, the last week’s low of Rs. 88.75 is likely to act as crucial support for the stock.

On Tuesday, the stock of Oriental Bank of Commerce closed at Rs. 92.90 per share, surged by 2.54 per cent. The stock opened at Rs. 90.80 per share and hit an intraday high of Rs. 93.65 and a low of Rs. 90 per share on BSE.