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Traders looking to capitalise on short-term movements could consider the Biocon stock as it seems to be heading southwards. It has broken a key support at ₹335 and there are signs of a further decline.
The stock, which has largely oscillated in the band between ₹280 and ₹315 during the first two months of this calendar year, started witnessing higher volatility since the beginning of March. By mid-March, it had depreciated to ₹235.5, from where it immediately reversed. The rally took the stock beyond ₹315, to register a fresh one-year high of ₹367.8 last month. From then on, the stock has been in a consolidation phase. Today, it broke below the ₹335 level, turning the near-term trend bearish.
The Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) indicator on the daily chart show bearish indications. While the RSI has slipped below the midpoint level of 50, the MACD has turned its trajectory downwards. Moreover, the daily chart shows a rounding-top pattern, which is an indication of a bearish trend reversal.
Considering these factors, one can take a bearish view and initiate fresh short positions with stop-loss at ₹340. Potential targets can be ₹315 and ₹300.
Supports: ₹315 and ₹300
Resistances: ₹335 and ₹345
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