HDFC forms Bearish Harami candle

The stock of Housing Development Finance Corporation (HDFC) has formed a Bearish Harami candlestick pattern on a daily scale. The Bearish Harami Candlestick Pattern is considered to be a bearish reversal pattern and usually occurs at the top of an uptrend.

A Bearish Harami candlestick pattern occurs when there is a large bullish candle on the first day followed by a smaller bearish candle on the second day. The most important aspect of the bearish Harami is that prices gapped down on the second day and were not able to move above the close of the first day. This is a sign that uncertainty could be entering the market.

The stocks Relative Strength Index (RSI) is cooled after touching the overbought region and at present, its reading is 62.12 level. The RSI is trading below its 9-day average and it is in falling mode, which depicts further downward momentum. The daily MACD stays negative as it is trading below the zero line. The fast stochastic is also trading below its slow stochastic line. Moreover, the negative divergence is clearly visible between daily RSI and stock price movement, which suggests limited upside.

In the near term, the 13-day exponential moving average, which is placed around Rs. 2,271.90, is likely to act as immediate support, while the major support is placed in the zone of Rs. 2,260-Rs 2,245 as it is the confluence of short term 20-day EMA and upward sloping trendline support. While on the upside, Thursday’s sessions high of Rs. 2,357.85 will be the immediate hurdle for stock.

On Friday, the stock of HDFC closed at Rs. 2,302 per share, dipping by 1.10 per cent. The stock opened at Rs. 2,332 per share and hit an intraday high of Rs. 2,339 and a low of Rs. 2,292.80 per share on NSE.