Torrent Pharmaceuticals forms bearish engulfing candle

The stock of Torrent Pharmaceuticals Limited has formed a bearish engulfing candlestick pattern on the weekly timeframe. This pattern is considered to be a bearish reversal pattern and usually occurs at the top of an uptrend.

Along with this bearish formation, the stock has managed to close below its weekly pivot and short-term moving average, i.e. 8-day EMA. Among the momentum indicators, the leading indicator, 14-period daily RSI, cooled off after touching the zone of 75 and at present, its reading is 55.55. The RSI is trading below its nine-day average and is in a declining mode, which indicates a further downside momentum. The fading momentum is also indicated by the MACD histogram that is declining since the last three trading sessions. Moreover, a negative divergence was also spotted at the daily and weekly timeframe on the RSI, which indicates a limited upside.

Going ahead, the stock has an immediate support in the zone of Rs 2,220-Rs 2,165 as it is the confluence of short-term moving averages, i.e. 13-day EMA and 20-day EMA. While on the upside, April 9 high of Rs 2,699 will be a major hurdle for the stock.

On Friday, the stock of Torrent Pharmaceuticals closed at Rs 2,246.90 per share, dipped by 3.52 per cent. The stock opened at Rs 2,385 per share and hit an intraday high of Rs 2,399 and a low of Rs 2,227.20 per share on BSE.