Technical Bits: Titan forms Three Outside Down pattern

The stock of Titan Company 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.

In Three Outside Down pattern, first candle is a small body bullish candle, which closes near its high. Second candle is a long body bearish candle, which completely engulfs the first candle's body, closes near its low, thus creating a bearish engulfing pattern. The third candle breaks the low of the second candle, and closes near its low.

On Monday, the stock has managed to close below its weekly pivot and short-term moving average, i.e. 8-day EMA and 13-day EMA. The 14-period daily RSI is currently quoting at 57.42 and it is trading below its 9-day average which suggests further downward momentum. The fast stochastic is also trading below its slow stochastic line. Moreover, the negative divergence is clearly visible between daily RSI, daily stochastic and stock price movement, which suggests limited upside.

Going ahead, if the stock sustains below Monday’s session low of Rs. 1,248.50 and trades convincingly below this level, then there is a high probability that previous weeks high point of Rs. 1,298.25 would become a temporary top for the stock. 

On Monday, the stock of Titan Company closed at Rs. 1,256.05 per share, dipped by 2.02 per cent. The stock opened at Rs. 1,286 per share and hit an intraday high of Rs. 1,292.55 and a low of Rs. 1,248.5 per share on NSE.