Technical Analysis

RCom sends a weak signal

Yoganand D | Updated on January 23, 2018 Published on May 24, 2015





There is a possibility of the stock reversing higher from its long-term support

Here are answers to readers’ queries on the performance of their stock holdings.

I am a long-term investor holding shares of Reliance Communications at ₹125. Advice me on whether to hold or exit.

SM Desai

Reliance Communications (₹64): The stock of Reliance Communications is in a downtrend across all time frames — long, medium and short term. The key support at ₹60 has been providing a base for the stock since late March this year.

A decisive plunge below this level will intensify the bearish momentum and pull the stock down to ₹50, which a significant long-term support.

The stock had reversed higher from the base level of ₹50 in September 2012 and again in March 2013. There is a possibility of it reversing higher from this base if there is a decline.

Therefore, you can consider averaging your position and holding it with a stop-loss at ₹45. Immediate resistances are pegged at ₹72 and ₹82 levels.

To alter the short-term downtrend, the stock needs to move above ₹82. But, to alter the medium-term downtrend, the stock must emphatically break through the resistance band between ₹100 and ₹105.

Such a break will have bullish implications and take the stock northwards to the level of ₹122 and then to ₹140. The next significant resistance is placed in the ₹160-165 range.

I bought shares of JBF Industries at ₹242. Should I hold them for a year?

S Saraswathy

JBF Industries (₹235.9): After registering a new high at ₹297 in early December 2014, the stock changed direction.

Since then, it has been trending downwards. Significant resistance near ₹260 is limiting the stock’s corrective rally. Last week, the stock encountered resistance at this level and started to decline. Immediate supports at ₹225 and ₹215 can arrest the stock’s decline. You can consider holding the stock with a stop-loss at ₹210.

An upward reversal can push the stock higher to ₹260 in the medium term.

To strengthen the bullish momentum, the stock needs to decisively break through the significant resistance level of ₹260 for an upmove to ₹300.

The long-term trend has been up for the stock from its March 2014 low of ₹65 levels. This uptrend will remain in place as long as the stock trades above the key support zone of ₹180 and ₹190. A decisive fall below this zone will mar the uptrend and pull the stock down to ₹140.

I have bought shares of Corporation Bank at ₹74. I can hold it for a year. Please advice on whether I should sell or hold them?

Pankaj Kumar

Corporation Bank (₹56.8): After encountering a key resistance in the band between ₹80 and ₹82 in June 2014, the stock reversed direction and resumed its primary downtrend.

Since then, it has been on an intermediate downtrend. Last month, the stock met with a key resistance at around ₹62 and continued to decline.

A decisive fall below the immediate support level of ₹55 can pull the stock down to ₹52 or ₹50 levels.

Further decline below the significant support zone of ₹50 and ₹52 can drag the stock down to ₹45 in the medium to long term.

The level of ₹45 is a significant long-term support from which the stock has reversed higher many times.

Therefore, you can hold the stock and also consider averaging with a stop-loss at ₹43 levels. A decisive break above the immediate resistance level of ₹62 can push the stock northwards to the level of ₹70.

A strong rally beyond ₹70 is required for an upmove to the resistance zone between ₹80 and ₹82. To alter the long-term downtrend, the stock needs to emphatically break the key long-term resistance level of ₹100.

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Published on May 24, 2015
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