Larsen & Toubro forms bullish engulfing candle

The stock of Larsen & Toubro forms a bullish engulfing candlestick pattern on the daily time frame. The bullish engulfing candlestick pattern consists of two real bodies of opposite colours, in which the second day’s body completely engulfs the previous day's body. A large bullish candle suggests that this was a sudden and decisive shift to bullish sentiment.

Interestingly, the daily RSI has broken out of falling wedge pattern, which is a bullish sign. The daily stochastic oscillator has also given a positive crossover, which indicates a further upward momentum. Moreover, the positive divergence is clearly visible between daily RSI, daily stochastic and stock price movement, which suggests a limited downside.

Going ahead, the stock needs to sustain above the zone of Rs 775 to Rs 830 for the bullish momentum to continue. On the downside, the last Wednesday’s low of Rs 661 is likely to act as a crucial support for the stock.

On Wednesday, the stock of Larsen & Toubro closed at Rs 769 per share, surged by 8.63 per cent. The stock opened at Rs 697.20 per share and hit an intraday high of Rs 775 and a low of Rs 661 per share on NSE.