Investors with a short-term perspective can consider selling the stock of Federal Bank at current levels. The stock has been on an intermediate-term uptrend since taking support at ₹72 in February this year. Also, the uptrend in this stock gained momentum after breaching its long-term resistance at ₹107 in May. Thereafter, the stock started to consolidate sideways, forming a raising wedge pattern. After recording a new high at ₹136, the stock began to decline forming a bearish engulfing candlestick pattern. Further, this decline is backed by negative divergence in the daily as well as weekly indicators. On Monday, the stock fell almost 2 per cent breaching its 21-day moving average.
The price rate of change indicator on the daily chart has entered the negative territory implying selling interest. We are bearish on the stock from a short-term perspective. The stock can decline to ₹121.5 initially and then to ₹119 in the upcoming sessions. Sell the stock with a stop-loss at ₹129.5.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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