Technical Bits: Pidilite Industries forms double bottom pattern

The stock of Pidilite Industries, after registering high of Rs. 1,304.80 on June 11, 2019 entered a downtrend and recorded a series of lower high-low. As on July 9, 2019, the stock had formed a swing low of Rs. 1,168.10 and formed a bullish Harami candle on next day and thereafter, the stock prices rebounded to touch the level of Rs. 1,239.90. However, the stock failed to hold on to higher levels and attempts to return to the previous trend. But the bears were not able to push prices much lower and stock registered an almost identical bottom on July 22, 2019. This resulted in the formation of a Adam and Adam double-bottom pattern. On Friday, the stock has also managed to close above the neckline of Adam and Adam double bottom pattern.

The major trend of stock is bullish as it is trading above the short-long term moving averages, i.e. 20-day EMA, 50-day EMA, 100-day EMA and 200-day EMA. Among the momentum indicators, the leading indicator 14-period RSI is currently quoting at 58.70 and it is trading above its 9-day average. The fast stochastic is also trading above its slow stochastic line. Moreover, a positive divergence was also spotted at the daily time frame on the RSI. A positive divergence occurs when the price is making a lower low, while the RSI forms a higher low.

In the near term, the 50-day exponential moving average, which is placed around Rs. 1,219, is likely to act as immediate support, while the 100-day exponential moving average, which is placed around Rs. 1,205, is likely to act as major support. On the higher side, the major resistance is placed in the zone of Rs. 1,254-1,260 level.