Central Bank of India (₹104.8)

Investors with a short-term perspective can consider selling the stock of Central Bank of India at current levels. The stock breached a key resistance level of ₹86.5 in early March 2017 and continued its intermediate-term uptrend that has been in place since November 2016 low of ₹76. However, the stock encountered a significant resistance at ₹123 in early May and started declining. The stock tested this resistance level of ₹123 on Monday and fell sharply.

On Wednesday, the stock fell 4 per cent with good volume, breaching a key long-term support at ₹110. For the week the stock has tumbled 9 per cent, forming a long bearish engulfing candlestick pattern in the weekly chart. Moreover, the daily relative strength index and price rate of change indicators are showing negative divergence, backing the stock’s trend reversal. The daily RSI is on the brink of entering the bearish zone from the neutral region.

The recent plunge has breached the short-term up trend-line decisively. The daily price rate of change indicator is featuring in the negative territory implying selling interest. The short-term outlook is bearish. The stock’s decline can extend and reach the price targets of ₹100 and ₹98 in the upcoming trading sessions. Sell the stock with a fixed stop-loss at ₹107.5.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

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