Technical Bits: NCC forms bearish engulfing candle

The stock of NCC Limited has formed a bearish engulfing candle on the weekly time frame. Bearish engulfing candlestick pattern is considered to be a bearish reversal pattern and usually occurs at the top of an uptrend.

On Friday, the short term trend is turned bearish as the stock has managed to close below its weekly pivot and short term moving averages, i.e. 20-Day EMA, 50-day EMA and 100-day EMA. The reversal is justified with strong volumes. From the momentum indicators perspective, the 14-period weekly RSI is currently quoting at 50.61 and it has given negative crossover. The weekly MACD stays bearish and is trading below zero line. Moreover, the negative divergence is clearly visible between daily RSI and stock price movement, which suggests limited upside.

In the near term, the 200-day exponential moving average, which is placed around Rs. 96.10, is likely to act as immediate support, while the major support is placed in the zone of Rs 91.50-91 as the upward sloping trendline support is placed in that region. While on the upside, 50-day EMA which is currently quoting at 101.90 will be the immediate hurdle for stock.

On Friday, the stock of NCC closed at Rs. 97.85 per share, dipped by 16.33 per cent. The stock opened at Rs. 110 per share and hit an intraday high of Rs. 110 and a low of Rs. 95.20 per share on BSE.