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Traders with a short-term perspective can sell the stock of Steel Authority of India at current levels. Following a short-term uptrend from the key base level at ₹55, the stock encountered a long-term resistance in the band between ₹75 and ₹77 last week. After failing to surpass this resistance band, the stock had reversed down in early January, making this resistance band more significant.
On Tuesday, the stock tumbled over 5 per cent with below average volume, reversing from the aforementioned resistance band. Further, this reversal was triggered by a negative divergence in the daily relative strength index and price rate of change indicator. Volumes on the daily chart have been decreasing over the past two weeks signalling lack of strength. Therefore, the short-term outlook for the stock is bearish. It can extend its decline and reach the price target of ₹66.5 and then ₹65 in the approaching trading sessions. Sell the stock with a stop-loss at ₹71.2.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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