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The outlook for the stock of Sonata Software is bearish. It has been a strong downtrend since October last year. Within thin downtrend a corrective bounce has been happening since February this year. This has been consistently facing resistance at the 200-Day Moving Average (DMA) is currently at ₹826. Below this, there is another resistance at ₹770-₹780. A further higher resistance at ₹805.The price action over the last few days gives an early sign that the corrective rise might have ended.
As such we can expect a fresh leg of fall in the coming days targeting ₹680 initially and then ₹640 eventually on the downside. Traders can go short now. Accumulate shorts on a rise at ₹768. Keep the stop-loss at ₹810. Trail the stop-loss down to ₹735 as soon as the stock falls to ₹705. Move the stop-loss further down to ₹695 as soon as the stock touches ₹680 on the downside. Book profits at ₹660. The resistance at ₹810 is a crucial one. A strong rise past ₹810 is necessarily to turn the trend up again. But such a strong rise looks less probable at the moment.
(Note: The recommendations are based on technical analysis. There is risk of loss in trading.)
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