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LIC Housing Finance forms three inside up candlestick pattern

Vinayak Gangule
/ Categories: Mindshare
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LIC Housing Finance forms three inside up candlestick pattern

The stock of LIC Housing Finance Limited had formed a spinning bottom candlestick pattern as on the weekend of March 27, 2020, and thereafter, witnessed a pullback rally. The pullback was nearly 75 per cent from the low of Rs 185.25, which was registered on March 25, 2020. However, the stock has formed a reversal bearish engulfing candlestick pattern as on August 31, 2020, and thereafter, again entered into the corrective phase.

On Monday, the stock formed a reversal ‘three inside up’ candlestick pattern on the daily timeframe. The three inside up pattern represents the confirmation of the bullish harami pattern, which shows the success of the forecast. 

In this pattern, the first candle is a long bearish candle, which closes near its low. The second candle is a small bullish candle, which gaps up from the first candle and closes inside the body of the first candle thus, creating a harami pattern. The third candle exceeds the high of the first two candles.

Along with this bullish formation, the stock has also managed to close above its weekly pivot. From a momentum oscillator perspective, the 14-period daily RSI is currently quoting at 46.87 and gave a positive crossover on Monday. The stochastic oscillator has also given a positive crossover, which supports the overall bullish price structure.

The Ichimoku chart on the 60-minute timeframe is clearly giving a positive view as it closed above the KS and TS lines. Another important aspect is that the TS line crossed above the KS line, which is also a bullish sign. 

Going ahead, the zone of Rs 288 -Rs 291 is a crucial resistance for the stock as it is the confluence of 61.8 per cent retracement of its prior downward move (Rs 310.65-Rs 260) and the short-term 20-day EMA level. On the downside, Thursday’s low of Rs 260 is likely to act as major support for the stock.

On Monday, the stock of LIC Housing Finance closed at Rs 282.20 per share, surged by 4.33 per cent. The stock opened at Rs 274.85 per share and hit an intraday high of Rs 283.70 and a low of Rs 272 per share on NSE.

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