Technical Bits: Petronet forms Dark Cloud Cover pattern

The stock has formed Dark Cloud Cover candlestick pattern on the daily scale. Petronet LNG had witnessed multiple touch point downward sloping trendline breakout at Rs. 233 on March 8, 2019 and thereafter the stock saw almost 9.39 per cent upward move.

 The Dark Cloud Cover is a bearish reversal candlestick pattern, which usually occurs when a bearish candle on Day 2 closes below the middle of Day 1’s candle. In addition, price gaps up on Day 2 is only to fill the gap and close significantly into the gains made by Day 1’s bullish candle. The rejection of the gap up is a bearish sign itself, but the retracement into the gains of the previous day's upmove adds even more bearish sentiment.

 Going ahead, if the stock slips below Monday’s session low of Rs. 246.30 and trades convincingly below this level, then there is high probability that Friday’s high point of Rs. 254.90 would become a temporary top for the stock. According to MACD analysis on daily time frame, there is a centreline bearish crossover, which is a negative signal. Moreover, there has been a negative divergence between the daily 14-period RSI and the stock price movement, which suggests limited upside.

 However, for any immediate decline, the zone of 238-241 level is likely to act as crucial support as short term 13-day EMA and 20-day EMA is placed in that region.

 On Tuesday, the stock of Petronet LNG Limited opened at Rs. 247.00 per share and was trading at Rs. 250.20 per share in the morning session, up by 1.17 per cent. The stock hit an intraday high of Rs. 250.50 and a low of Rs. 246.10 per share on BSE.