Technical Bits: Dmart forms Three Outside Down pattern

The stock of Avenue Supermarts Limited, the operator of big-box retail chain D-Mart, formed Three Outside Down candlestick pattern on the daily time frame. Three Outside Down pattern is representing the confirmation of the Bearish Engulfing pattern, can only show the success of the forecast of the appropriate Engulfing pattern.

With this, the stock had formed shooting star like candlestick pattern on the weekly time frame. The Shooting Star candlestick formation is viewed as a bearish reversal candlestick pattern that typically occurs at the top of the uptrend. The long upper shadow of the Shooting Star implies that the market tested to find where resistance and supply was located.

On Friday, the stock has managed to close below its weekly pivot and short-long term moving average, i.e. 20-day EMA, 100-day EMA and 200-day EMA. The 14-period RSI cooled off after touching 65 zone and at present, its reading is 49.21. The RSI is trading below its 9-day average and it is in falling mode, which indicates further downside momentum. The fast stochastic is also trading below its slow stochastic line. Moreover, the Ichimoku chart on the daily time frame is clearly giving a negative view as it closed below the KS and TS lines.

Going ahead, if the stock sustains below Friday's session low of Rs. 1,348 and trades convincingly below this level, then there is a high probability that previous weeks high point of Rs. 1,475 would become a temporary top for the stock.

On Friday, the stock of Avenue Supermarts closed at Rs. 1,352.90 per share, dipped by 5.59 per cent. The stock opened at Rs. 1,435.20 per share and hit an intraday high of Rs. 1,445 and a low of Rs. 1,348 per share on NSE.