Dr Reddys Laboratories form dark cloud cover pattern

The stock of Dr Reddy’s Laboratories Limited has formed a dark cloud cover candlestick pattern on the daily timeframe. The dark cloud cover is a bearish reversal candlestick pattern, which usually occurs at the top of an uptrend.

Along with this bearish formation, the stock has also managed to close below its weekly pivot. Among the momentum indicators, the 14-period daily RSI cooled off after touching the zones of 65-67 and at present, it is quoting at 57.80. The RSI is trading below its nine-day average and it is in a falling mode, which indicates a further downside momentum. The stochastic has also given a bearish crossover. There has been a negative divergence between the daily stochastic and the stock price movement, which suggests a limited upside.

Moreover, Ichimoku chart on the 30-minute time frame is clearly giving a negative view as it closed below the KS and TS lines. Another important aspect is that the TS line crossed under the KS line, which is also a bearish sign. 

Going ahead, the stock has an immediate support in the zone of Rs 3,890-Rs 3,870, as it is the confluence of upward sloping trendline support and short-term moving average i.e. 13-day EMA. While on the upside, Monday’s high of Rs 4,092.35 will be a major hurdle for the stock.

On Monday, the stock of Dr Reddy’s Laboratories closed at Rs 3,953.55 per share, dipped by 2.89 per cent. The stock opened at Rs 4,077.60 per share and hit an intraday high of Rs 4,092.35 and a low of Rs 3,941.05 per share on NSE.