Force Motors in a medium-term downtrend

A break above ₹3,200 can alter the downtrend and take the stock up to ₹3,600

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

What is the the technical view for Force Motors and Wim Plast bought at ₹4,350 and ₹1390 respectively.

Murali

Force Motors (₹2,758): Following a long-term uptrend from the August 2013 low of ₹225, the stock of Force Motors encountered a key resistance at around ₹4,800 in October 2016. In April 2017, it tested the key resistance at ₹4,800 and changed direction. Since then, the stock has been in an intermediate-term downtrend.

 

However, the stock now tests a key short-term support at ₹2,750. An upward reversal from this base can witness a sideways movement in the ₹2,750-3,200 band over the medium term. But an emphatic decline below this base level can drag the stock down to ₹2,600 or to the long-term support level of ₹2,500 in the short to medium term.

The long-term uptrend will be in place as long as the stock trades above the 50 per cent fibonacci retracement level of the prior up-leg as well as a key long-term support at ₹2,500. Investors with a long-term perspective can stay invested with a stop-loss at ₹2,450 levels.

Having said that, if the stock falls below ₹2,500, it can extend the downtrend to ₹2,200 and ₹2,000. In that scenario, investors can consider exiting and re-entering at lower levels.

But, a decisive break above the vital resistance level of ₹3,200 is needed to alter the short-term downtrend and take the stock up to ₹3,500 and ₹3600. To alter the intermediate-term downtrend, the stock needs to conclusively move beyond the significant resistance level of ₹3,800. Subsequent resistances are at ₹4,000 and ₹4,200. You can consider averaging the stock at lower levels with a long-term stop-loss at ₹2,450 levels.

Wim Plast (₹940): The Wim Plast stock has been in an intermediate-term downtrend since testing a significant long-term resistance at ₹1,650 in June 2017. Medium-term trends are also down for the stock. It conclusively breached a key support at ₹1,100 this April and extended its downtrend. The stock now heads towards the next significant long-term support in the band between ₹800 and ₹850 with a pause at the immediate base level of ₹900.

 

You can consider averaging the stock at the long-term support band with a stop-loss at ₹760. An upward reversal from this base zone can take the stock higher to the immediate resistance level of ₹1,000 and then to ₹1,100.

A strong breakthrough of the key resistance level of ₹1,100 is needed to alter the short-term downtrend and push the stock higher to ₹1,200 levels. Resistances are at ₹1,300 and ₹1,400. Key supports below ₹800 are at ₹750 and ₹700.

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