Torrent Power forms dark cloud cover pattern

During a strong sell-off in the markets, the stock of Torrent Power Limited fell about 30 per cent from the top in a period of almost one month. During this period, the stock dropped to the level of Rs 231.95. This level is acting as a strong support zone for the stock and every time it fell towards this area, it has taken support and bounced back sharply. So since 2019, the stock has not breached this crucial support zone of Rs 230 to Rs 232.

After taking support around this region, the stock climbed back gradually and registered new 52-week high of Rs 349.95 level. However, considering the daily timeframe, the stock has formed reversal dark cloud cover candlestick pattern. The dark cloud cover is a bearish reversal candlestick pattern, which usually occurs at the top of an uptrend.

Along with this bearish formation, the stock has also managed to close below its weekly pivot. Among the momentum indicators, the 14-period daily RSI cooled-off after touching the zones of 70-72 and at present, it is quoting at 59.72. The RSI is trading below its nine-day average and it is in a falling mode, which indicates a further downside momentum. Moreover, the RSI is showing a negative divergence on the daily chart and the stochastic oscillator already gave a negative crossover, which suggests a limited upside. 

Going ahead, the stock has an immediate support in the zone of Rs 322-317 as the short-term 13-day EMA and 20-day EMA are placed in that region while, a major support is placed in the zone of Rs 310-307 as it is the confluence of upward sloping trendline support and 50-day EMA level. While on the upside, Monday’s high of Rs 349.95 will be a major hurdle for the stock.

On Monday, the stock of Torrent Power closed at Rs 330.35 per share, dipped by 4.12 per cent. The stock opened at Rs 349.95 per share and hit an intraday high of Rs 349.95 and a low of Rs 327.55 per share on NSE.