Reliance Industries forms bullish engulfing candle

The stock of Reliance Industries Limited (RIL) had formed a Doji candlestick pattern as of September 16, 2020, and thereafter, witnessed a throwback. The throwback was nearly 23 per cent from the high of Rs 2,369.35 level. The throwback is halted near the 38 per cent retracement of its prior upward rally (Rs 875.65-Rs 2,369.35) and coincides with the long-term 200-day EMA level.

In addition to this, the stock has formed a bullish engulfing candlestick pattern on the daily timeframe. This suggests that the bulls are taking control near the support zone. The bullish engulfing candlestick pattern is considered to be a bullish reversal pattern and usually occurs at the bottom of a downtrend.

Among the momentum indicators, the 14-period daily RSI is currently quoting at 31.86. The RSI is trading above its 9-day average and it is in a rising mode, which indicates a further upward momentum. The commodity channel index (CCI) has also given a positive crossover. Moreover, a positive divergence is clearly visible between the daily stochastic and the stock price movement, which suggests a limited downside.

Moreover, the Ichimoku chart on the 30-minute timeframe is clearly giving a positive view as it closed above the KS and TS lines. Another important aspect is the TS line that crossed under the KS line, which is also a bullish sign.

Going ahead, if the stock sustains above Wednesday’s session high of Rs 1,929 and trades convincingly above this level, then there is a high probability that Tuesday’s lowest point of Rs 1,835.10 would become a temporary bottom for the stock.

On Wednesday, the stock of Reliance Industries closed at Rs 1,913.20 per share, surged by 3.39 per cent. The stock opened at Rs 1,837 per share and hit an intraday high of Rs 1,929 and a low of Rs 1,837 per share on NSE.