Technical Analysis

Bharat Forge (₹324): Sell

Akhil Nallamuthu | Updated on July 01, 2020 Published on July 01, 2020

BL Research Bureau

Traders hunting for near-term opportunity can consider initiating new short positions in the stock of Bharat Forge.

The stock, which has been rallying since early April, appreciated from ₹210 levels and it recorded a three-month high of ₹385.7 towards the end of June. However, it failed to move beyond that level, and the price started to moderate. Following this, the stock breached the vital support of ₹330, thus forming a lower low in the daily chart for the first time in three months. Moreover, on the daily chart, a confirmed double-top pattern – an indication of bearish reversal – can be spotted. This could mean that the short-term trend has turned negative, and the likelihood of further depreciation is high.

Substantiating the bearish view, the daily relative strength index has been falling sharply since last week; it has slipped below the midpoint level of 50. Also, the moving average convergence divergence indicator on the daily chart, though in the positive territory, has turned the trajectory downwards. Considering the above factors, traders can sell the stock with a stop-loss at ₹330. The next support levels are at ₹310 and ₹300, which can the potential targets. According to the double-top pattern, the stock could even fall to ₹280.

Supports: ₹310 and ₹300

Resistances: ₹330 and ₹340

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

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Published on July 01, 2020
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