Technical chart shows trend reversal in Tata Power

The stock has displayed poor performance as it fell nearly 9% this week. The traders have booked their profits and now it is under a free fall.

The stock of Tata Power had shot up lately and had surged about 20% in six weeks. It had attracted buyers in the past few weeks and has delivered decent returns to the traders. However, the stock has displayed poor performance as it fell nearly 9% this week. The traders have booked their profits from the stock and now it is under a free fall.

On the technical chart, the stock has formed a bearish engulfing pattern on the weekly timeframe. The pattern is confirmed by the huge volume recorded for the week. The volume is greater than 10-period and 20-period weekly volumes. On Friday, the stock fell about 3% which justifies the profit booking in the stock.

To add further, the technical parameters hint towards bearishness. On the daily timeframe, the MACD histogram is rising on the downside, indicating a downward move. The 14-period daily RSI was also fallen below 50 and indicates weak strength in the stock. The stock has closed below its short term moving average like 20-day and 50-day moving averages. The Elder Impulse system has given a fresh sell signal. The other momentum oscillators and indicators are pointing towards the bearishness of the stock.

Overall, the picture looks quite fearful for the near future. The level of Rs 223 is expected to act as good support for the stock. This level happens to be its 100-day moving average. Moreover, the 61.8% Fibonacci retracement level also lies at 220. Thus, any closing below the level shall trigger further sell-off and the stock can see levels of Rs 200 in short term. Traders who are long in the stock are expected to review their positions as the technical chart shows a change in the trend of the stock. It shall remain under pressure for some time until it shows any signs of strength.

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