Vedanta forms descending hawk pattern

The stock of Vedanta Limited has formed a descending hawk candlestick pattern on the daily timeframe. The descending hawk pattern closely resembles a bearish harami or inside day pattern except for the fact that in descending hawk pattern, both the bodies are green rather than opposite in colour. The pattern may indicate that there is a weakening of the current uptrend, which increases the likelihood of a reversal. However, the confirmation of the pattern is based on the position of the third candle. To trigger a sell signal, the third candle has to close below the low of the first candle, which is currently placed at Rs 161 level.  

From the momentum indicators' perspective, the 14-period RSI has cooled off after touching 75 levels and at present, its reading is 73.30. The RSI and the stochastic is showing a negative divergence on the daily chart, which suggests a limited upside. Interestingly, recently, the price has made three higher highs, but most of the indicators, including the RSI, have not reached the prior highs. The CCI has also supported the same phenomenon.  

Going ahead, it’s important for the stock to sustain and close below the first candle’s low, which is placed at Rs 161. A sustainable move below the level of Rs 161 is likely to open up gates for a further correction towards the levels of Rs 156.10, followed by Rs 130 level. While on the upside, Friday’s high of Rs 171.50 would be seen as an immediate resistance zone for the stock.  

On Tuesday, the stock of Vedanta Limited closed at Rs 169 per share, dipped by 0.73 per cent. The stock opened at Rs 168.50 per share and hit an intraday high of Rs 170.45 & a low of Rs 166.90 per share on NSE.