Technical Bits: Ashok Leyland forms Three Inside Down pattern

Source: dsij.in

The stock of Ashok Leyland Limited has formed a Three Inside Down candlestick pattern on daily scale. The Three Inside Down pattern is representing the confirmation of the Bearish Harami Pattern, which shows the success of the forecast. 

In this pattern, first candle is a long bullish candle, which closes near its high. Second candle is a small bearish candle, which gaps away from the first candle and closes inside the body of the first candle, thus creating a harami pattern. Third candle exceeds the lows of the first two candles.

The long term trend is negative, as the stock is trading below its 20-day EMA, 50-day EMA ,100-day EMA and 200-day EMA. The 14-period daily RSI is currently quoting at 47.78, and it is trading below its 9-day average. The fast stochastic is also trading below its slow stochastic line. Moreover, the Ichimoku chart on the daily time frame is clearly giving a negative view as stock has managed to close below its KS line, TS line and Ichimoku cloud.

In the near term, the zone of Rs. 90.40 – 91 is likely to act as major resistance for stock as it is the confluence of downward sloping trendline resistance and 100-Day EMA level.  While on the downside, any sustainable move below Friday’s low would lead to further correction up to the level of Rs. 80.

On Friday, the stock of Ashok Leyland closed at Rs. 86.85 per share, dipping by 3.10 per cent. The stock opened at Rs. 90.05 per share and hit an intraday high of Rs. 90.45 and a low of Rs. 86.50 per share on NSE.