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The outlook for the stock of Finolex Cables has turned bearish. The stock fell about 2 per cent on Thursday breaking below the 21-DMA support decisively. This fall confirms the reversal of the uptrend that was in place since January. The rally from the January low of ₹201, halted in March at ₹305. The stock had then consolidated all through April. The price action on the charts of this consolidation phase is reflecting a descending triangle pattern, which is a reversal pattern.
The fall on Thursday broke this consolidation phase, thus confirming the pattern breakout. Strong resistance is at ₹280 which is likely to cap the upside. An immediate fall to test the support at ₹268 is possible. Traders with a short-term perspective can go short. Stop-loss can be kept at ₹281 for a target of ₹263. Make use of intermediate rallies to ₹280 to accumulate shorts. Revise the stop-loss lower to ₹271 as soon as the stock moves down to ₹267.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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