Bank of Baroda shows notable technical formation

The stock of Bank of Baroda has formed a dark cloud cover candlestick pattern as of January 21, 2021 and thereafter, witnessed over 20 per cent correction. The correction is halted near the 50-day EMA level and initiated its northward journey. From the low of Rs 64.50, Bank of Baroda stock has seen nearly 38 per cent upward momentum in just six trading sessions.  

However, on the last trading session of the week, the stock has witnessed over 7 per cent correction from the higher levels. This resulted in the formation of a shooting star candlestick pattern, which suggests a possible trend reversal. The shooting star candlestick formation is viewed as a bearish reversal candlestick pattern, which typically occurs at the top of an uptrend. The long upper shadow of the shooting star implies that the market is being tested to find out where the resistance and supply were located.  

The momentum indicators are also supporting the same phenomenon. The price has made three higher highs in recent times but most of the indicators, including the RSI, have not reached near the prior highs. Further, the stochastic oscillator has given a bearish crossover on the daily chart, which suggests a pause in the uptrend.   

Going ahead, the 5-day EMA level is likely to act as immediate support for the stock, which is currently quoting at Rs 78.69. In case, the stock sustains below the 5-day EMA level, then it may witness some profit booking. While on the higher side, Friday’s high of Rs 89 will be crucial resistance for the stock.