NCC forms a double bottom pattern

After registering a high of Rs 38.20 on August 20, 2020, the stock of NCC Limited has entered into a corrective phase and recorded lower lows. As on September 09, 2020, the stock had formed a swing low of Rs 29.65 along with a bearish candle with a long lower shadow, and thereafter, the stock prices rebounded to touch the level of Rs 34.50. However, it failed to sustain at higher levels and again witnessed a fall. But the bears were not able to push the prices much lower and so, the stock registered almost identical bottoms as on September 24, 2020. This resulted in the formation of the Adam & Adam double bottom pattern.

Going ahead, it’s important for the stock to sustain and close above the neckline of the double bottom pattern, which is placed in the region of Rs 34.50-Rs 34.80. A sustainable move above the level of Rs 34.50-Rs 34.80 is likely to open up gates for a further rally towards its prior swing high of Rs 38.20. The stock is trading above its important long-term moving average i.e. 100-day EMA, which is placed at the levels of Rs 32.45 and can act as good support for the stock in the coming days. 

Interestingly, the daily RSI has also given a neckline breakout of the Adam & Adam double bottom pattern, which is a bullish sign. The stochastic oscillator has also given a positive crossover. Further, the daily MACD line has recently crossed the signal line, which resulted in the histogram turning positive.

On Friday, the stock of NCC surged by 13.57 per cent and closed at Rs 33.90 per share. The stock had opened at Rs 30.40 per share and hit an intraday high of Rs 34.50 and a low of Rs 29.80 per share on NSE.