Ujjivan Financial forms a double bottom pattern

The stock of Ujjivan Financial Services Ltd., after registering a high of Rs. 371.60 in the first week of June, had entered into a downtrend and recorded series of lower high-low. As on July 30, 2019, the stock had formed a swing low of Rs. 252.15 and the next day formed a bullish harami candlestick pattern and thereafter, the stock prices rebounded to touch the level of Rs. 295.40. However, the stock failed to hold on to higher levels and failed in attempts 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 August 26, 2019. This resulted in the formation of Adam and Adam double-bottom pattern.

On Friday, the stock has given breakout above the neckline of double bottom formation, backed by strong volumes. Additionally, the stock formed a sizeable bullish candle on breakout day, which adds strength to the breakout. Currently, the stock is trading above its 20-day EMA (281.60), 50-day EMA (287.80), 100-day EMA (295.70) and 200-day EMA (302), which indicates a medium-long term uptrend. From the momentum indicators perspective, the 14-period daily RSI is quoting at 61.31 and it is in rising trajectory, which suggests bullish bias. The daily stochastic oscillator is also suggesting some bullish strength as %K is above the %D. Moreover, the Ichimoku chart on daily time frame is clearly giving a positive view as it closed above the KS and TS lines.

Going ahead, the stock has strong support in the zone of Rs. 288-286, while on the higher side, the major resistance is placed in the zone of Rs. 323-325 level.

On Friday, the stock of Ujjivan Financial Services closed at Rs. 303.80 per share, up by 3.44 per cent. The stock opened at Rs. 290.50 per share and hit an intraday high of Rs. 305.80 and a low of Rs. 285.85 per share on BSE.