Exide Industries forms a double bottom pattern

The stock of Exide Industries Limited has formed a Reversal Bearish Engulfing candlestick pattern on November 26, 2019, and thereafter entered into the downtrend. As on December 10, 2019, the stock formed a swing low of Rs 177.10, following which the stock prices rebounded to touch level of Rs 186.90. However, the stock failed to hold on to higher levels and price attempt to return to the previous trend but the bears were not able to push prices much lower and the stock registered an almost identical bottom as on December 24, 2019. This resulted in formation of Adam and Adam double bottom pattern.

Going ahead, it is important for the stock to sustain and close above the neckline of the double bottom pattern, which is placed in the region of Rs 186.50-187. A sustainable move above the level of Rs 186.50-187 is likely to open up gates for further rally towards levels of Rs 197, followed by Rs 208. On Friday, the stock managed to close above its weekly pivot and short term moving averages, that is, 13-day EMA and 20-day EMA. A positive divergence was also spotted at the same time on the RSI, which indicates a limited downside. A positive divergence occurs when the price is making lower low while the RSI forms a higher low.

On Friday, the stock of Exide Industries closed at Rs 184.55 per share, surged by 3.59 per cent. The stock opened at Rs 178.50 per share and hit an intraday high of Rs. 185.70 and a low of Rs 178.05 per share on BSE.