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Tata Steel moved lower last week in line with our expectation. But the reversal above Rs 700 denotes that the B wave that began at the trough at Rs 557 could be extending. The momentum indicators in the weekly chart continue to point southwards though the daily oscillators are buoyant. This implies that though the near-term trend is up, caution is advisable from a medium-term perspective. Fresh trading longs should be initiated only if the stock moves past Rs 830. Once beyond this level, it can rally to Rs 865 or Rs 966.

Conversely, a reversal below this resistance will drag the stock down towards Rs 650 again. Long term investors need not worry as long as the stock remains above Rs 600.

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