Can ‘Dark Cloud Cover’ Trigger a Fall in this Stock?

  • Stock Market Analysis
  • Editors Pick

In the midst of the ongoing selling spree, many stocks have already tumbled to a decent low, which hampers the risk-to-reward ratio of continuing to trade in the direction of the fall. Therefore, two scenarios that investors need to look for are either a fresh breakdown from a support level or a stock that has just started to fall from the highs. 

One stock that has stood the selling pressure quite well so far but it seems like it is also giving up its strength is Titan (NS: TITN ) which is a INR 2,37,848 crores big consumer business engaged in offering watches, jewelry and eyewear. 

The share price of Titan has resisted the broader market selling pressure so far. Even yesterday, the stock took a decent plunge but recovered almost completely before the closing. But today, as the benchmark Nifty 50 index is up 0.4% to 17,084 by 1:03 PM IST, the share price of Titan is down 1.83% to INR 2,606. This is showing the relative underperformance of the stock and might be getting it ready for a fall from the current level. 

Image Description: Daily chart of Titan with the RSI at the bottom

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Looking at the daily chart of Titan, the stock had made a crystal-clear bearish divergence at the very top which is one of the most prominent and my personal favorite reversal signals. As the stock made a new high on 23 September 2022, the RSI (daily, 14) failed to move to a new high which depicts a slowing down of the current upward momentum. 

Another interesting thing to note is, right after the divergence the stock also gave another bearish signal in the form of a dark cloud cover candlestick pattern. It is a two-candlestick pattern that is known to reverse a prior uptrend and is a mirror reflection of a piercing pattern that depicts a bullish reversal. In this, the stock forms a big bullish candle depicting the prior uptrend but on the second day forms a red candle that opens above the close of the previous day’s candle and closes at least halfway through the real body of the first candle. 

Both the bearish divergence and a dark cloud cover pattern are depicting a trend reversal from here. The best part is that the stock is still at the highs which gives a very healthy risk-to-reward ratio for those who are planning to go short on this stock, looking at the broader market weakness. 

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  • Vijaybhai Pandya @Vijaybhai Pandya
    now it will break 1705 also
    Like 0
  • Pradip Kumar Paul @Pradip Kumar Paul
    Great Analysis
    Like 0
  • naira nazir @naira nazir
    tell something about vip clothing
    Like 0
  • naira nazir @naira nazir
    tell something about vip clothing
    Like 0
  • ankur rana @ankur rana
    great to learn that
    Like 1
  • Vishu Aggarwal @Vishu Aggarwal
    Like 0
  • Ria Singh @Ria Singh
    Like 0

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