The uptrend stock of JK Paper was in place since March 2020 is showing sign of a reversal. The price action since March this year indicates a double top reversal pattern on the chart. The sharp 8.7 per cent fall on Monday has dragged the stock well below ₹288. This is giving an initial sign of the pattern confirmation. Immediate support is at ₹260 – the 200-Day Moving Average (DMA). A bounce from ₹260 can face resistance around ₹288 – the neckline of the double-top pattern. So, upside can be capped at ₹288.
An eventual break below ₹260 – the 200-DMA can drag the stock down to ₹220 over the next three-four weeks. Traders can go short at current levels. Accumulate shorts on a rise at ₹285. Keep the stop-loss at ₹303. Trail the stop-loss down to ₹268 as the stock falls to ₹254. Move the stop-loss further lower to ₹246 as soon as the stock touches ₹238 on the downside. Book profits at ₹230. The stock will have to rise past ₹300 in order to ease the downside pressure and turn the outlook positivelooks unlikely at the moment.
(Note: The recommendations are based on technical analysis. There is risk of loss in trading.)