Technical Bits: Hindpetro forms Dark Cloud Cover pattern

The stock of Hindustan Petroleum Corporation has formed Dark Cloud Cover candlestick pattern on the weekly scale. The Dark Cloud Cover is a bearish reversal candlestick pattern, usually occurs when a bearish candle on Day 2 closes below the middle of Day 1’s candle.

 

With this, on the daily time frame, the stock had formed identical three crows pattern started from June 3, 2019 followed by the small bullish candle. Identical three crows pattern is bearish reversal pattern and usually occurs at the top of an uptrend. Each closing price establishes the opening price for the next trading day. Additional downside price action should follow.

 

Going ahead, if the stock slips below the Friday’s sessions low of Rs. 303.10 per share and trades convincingly below this level, then there is a high probability that the current week’s high point of Rs. 333.50 would become a temporary top for the stock. The 14-period RSI cooled off after touching 69 zone and at present, its reading is 58.72. The stochastic has also given negative crossover, which suggests a pause in the uptrend. Moreover, the negative divergence is clearly visible between daily RSI, daily stochastic and stock price movement, which suggest limited upside.

 

On Friday, the stock of Hindustan Petroleum Corporation closed at Rs. 311.20 per share, surging 1.01 per cent. The stock opened at Rs. 306.10 per share and hit an intraday high of Rs. 312 and a low of Rs. 303.10 per share on NSE.