I’ve a long position on September Federal Bank futures bought at ₹196. Should I hold or exit? – Palani S
The Federal Bank (₹186.2): The stock faced strong resistance at ₹205 and has been falling since mid-August. Likewise, the September futures began falling off ₹206. In early September, it slipped below a key support at ₹192. This confirmed a double-top chart pattern, a bearish indication. According to this chart set up, the price is likely to fall to ₹178.
Nevertheless, over the past few sessions, the stock has been moving in the narrow range of ₹182-188. This gives the bulls some hope. However, unless the stock surpasses ₹192, the downswing to ₹178 will remain as a strong possibility. Moreover, a recovery after the potential fall to ₹178 is uncertain at the moment.
Considering the above factors, you may hold the longs but place a stop-loss at ₹180. When the contract rallies to ₹192, revise the stop-loss to ₹188. Tighten the stop-loss to ₹192 when the price hits ₹196. Exit the longs at ₹200.
Send your queries to derivatives@thehindu.co.in