Granules India forms three inside down pattern

The stock of Granules India Limited has formed a three inside down candlestick pattern on the daily time frame. The three inside down pattern represents a confirmation of the bearish harami pattern, which indicates that the forecast is successful.

In this pattern, the first candle is a long bullish candle, which closes near its high. The second candle is a small bearish candle, which gaps away from the first candle and closes inside the body of the first candle, thus creating a harami pattern. The third candle exceeds the lows of the first two candles.

With this bearish formation, the stock has also managed to close below its weekly pivot and short-term moving average, i.e. eight-day EMA level. Among the momentum indicators, the 14-period daily RSI cooled off after touching the zone of 75-76 and at present, its reading is 60.31. The RSI is trading below its nine-day average and it is in the falling mode, which indicates a further downside momentum. The daily stochastic oscillator is also suggesting some bearish momentum as per cent K is below the per cent D. On the daily scale, the Know Sure Thing (KST) has also given a bearish crossover. Moreover, a negative divergence is also spotted on the daily time frame on the RSI, which indicates a limited upside.

Going ahead, Wednesday’s high of Rs 189 is critical for the bulls to continue the rally. If it is unable to surpass this level then, there are chances of entering into a corrective to sideways phase where Rs 169 is likely to act as a support level. Any close below Rs 169 will lead to a fall up to the level of Rs 157.70.

On Monday, the stock of Granules India Limited closed at Rs 173.50 per share, down by 5.89 per cent. The stock opened at Rs 182.10 per share and hit an intraday high of Rs 183 and a low of Rs 172.75 per share on NSE.