The stock of UPL is witnessing selling pressure after rallying a sharp 21 per cent in the previous week.

The stock started to decline after encountering resistance at ₹285. Triggered by negative divergence, the stock is now on the brink of changing its trend. Moreover, the stock fell 4 per cent on Thursday and formed a bearish engulfing candlestick pattern, which is a bearish reversal pattern. With this the upside in the stock has been limited to ₹277 levels. Investors with a short-term perspective can sell the stock at current levels.

The daily indicators such as relative strength index and price rate of change are displaying negative divergence implying a trend reversal. Immediate significant support for the stock is pegged far down at ₹220 levels. A fall below the near-term support of ₹265 will pave the way for a steep decline. The short-term targets for the stock are ₹260 and then ₹254. Traders can sell the stock while maintaining a stop-loss at ₹277.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

(This article was published on May 8, 2014)
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