Today's Pick

Today’s pick: Sell Tata Chemicals (₹732.6)

Yoganand D BL Research Bureau | Updated on March 17, 2021

The stock of Tata Chemicals registered a 52-week high at ₹795 last week and started to decline, triggered by negative divergence on the daily relative strength index and the price rate of change indicator. Also, a key resistance in the band between ₹790 and ₹800 has capped the side.

On the back of selling interest and profit-booking, the stock tumbled 5.5 per cent with low volume on Wednesday. This fall provides investors/traders with a short-term perspective an opportunity to sell the stock at current levels. The stock took support at ₹466 in early February this year and had been on a medium-term uptrend until it encountered the key resistance in the ₹790-800 band in early March. Thereafter, it began to move sideways with a negative bias.

There has been a decrease in daily volume over the past two weeks. The stock has formed a bearish engulfing candlestick pattern on the weekly chart, indicating short-term trend reversal. The daily relative strength (RSI) is on the brink of entering the neutral region from the bullish zone. Moreover, the weekly RSI is displaying negative divergence, backing the-trend reversal, and is charting down from the overbought territory.

The daily price rate of change indicator has entered the negative terrain, indicating selling interest. Taking a contrarian view, the short-term outlook is bearish for the stock. It can continue to trend down and reach the price targets of ₹704 and ₹690 in the ensuing trading sessions. Traders can sell the stock with a stop-loss at ₹748.

The recommendations are based on technical analysis. There is risk of loss in trading

Published on March 18, 2021

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