UltraTech Cement forms a double bottom pattern

After registering the high of Rs 4,224 as on August 24, 2020, the stock of UltraTech Cement Limited witnessed a correction. On September 09, 2020, the stock had formed a swing low of Rs 3,779 as well as a reversal spinning bottom candlestick pattern, and thereafter, the stock rebounded to touch the level of Rs 4,023.40. However, the stock 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 of September 24, 2020. This resulted in the formation of Adam & Adam double bottom pattern.

On Tuesday, the stock has given a neckline breakout of double bottom formation, backed by strong volumes. Additionally, the stock formed a sizeable bullish candle on the breakout day, which adds strength to the breakout. Currently, the stock is trading above its short and long-term moving averages.

Talking about the indicators, the leading indicator i.e. the 14-period daily RSI is currently quoting at 59.12 and it’s in a rising trajectory. Interestingly, the daily RSI has also given a neckline breakout of a double bottom pattern, which is a very bullish sign. The daily and the weekly stochastic is also suggesting a bullish momentum as the fast stochastic is trading above its slow stochastic line. The lagging indicator i.e. the daily MACD stays bullish as it is trading above its zero line.

Going ahead, the stock has strong support in the zone of Rs 3,960-Rs 3,920, while on the higher side, major resistance is placed in the zone of Rs 4,200-Rs 4,230 level.