The outlook for the stock of Cadila Healthcare is negative. The strong rally that was in place since March 2020 reversed direction in May this year after marking a high of ₹673.7. The stock has slipped below the 50-day moving average and also broken below a rising trendline. Additionally, a bear flag is also being confirmed as the stock broke below the support at ₹530 last month.
These indicators on the chart confirm the trend reversal. So, the stock is likely to extend the decline towards the next key support at ₹418. Notably, the bear-flag pattern also indicates a fall to ₹418. Nevertheless, there can be a pause at ₹450 and there are chances to either consolidate above it or see a short-lived corrective rally. Given this, traders can sell at current levels and short again on a rise to ₹530. Stop-loss at ₹555. Exit half of the shorts at ₹450 and revise down the stop-loss to ₹470 for the rest. Exit the balance at ₹418.
(Note: The recommendations are based on technical analysis. There is risk of loss in trading.)