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We recommend a sell in Essar Oil stock from a short-term trading perspective. It is apparent from the charts that after bottoming in early March at Rs 60, it accelerated in early April. However, following an up-move to Rs 194, the stock encountered significant resistance in the range of Rs 180 and Rs 195 in early June. Since then, the stock has been on a medium-term downtrend. We notice the formation of a bearish engulfing candlestick patterns in daily and weekly charts, triggering the trend reversal. While trending down, the stock conclusively breached its 21-day moving average and key support levels at Rs 160. Moreover, the stock broke through another key support at Rs 130 by plunging 10 per cent on July 8. The daily relative strength index is featured in the bearish zone and the weekly RSI is declining in the neutral region towards this zone. Besides, the daily moving average convergence and divergence indicator has entered the negative territory. We are bearish on the stock from a short-term perspective. We expect it to fall until it hits our price target of Rs 112 in the approaching trading sessions. Traders with a short-term perspective can sell the stock while maintaining a stop-loss at Rs 131.

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