Nirmal Bang has come out with its technical call on Bata India
. According to the research firm, one can sell Bata India Future at CMP Rs 787 with a stop loss Rs 822 for targets Rs 735-710-680. (Medium Term Holding Period 2-3 Weeks).
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- The stock has advanced since December'11 and the rally halted in late May'12 as the stock formed a Bearish Head & Shoulder Pattern. The current pattern is tilted downwards which adds further bearishness to the formation.
- There was negative divergence observed in RSI in the month of May'12 which indicated an impending trend reversal on cards.
- The MACD after a negative divergence gave a bearish crossover in late May'12 which formed the Head of the Pattern and is currently below the 0 line.
- The MACD histogram is the difference between the MACD line & the 9 ema which is currently in the negative territory indicating that the indicator is in bearish momentum.
- The stock has violated the Bearish Head & Pattern neckline which validates the pattern breakout in the stock and indicates a trend reversal.
- The stock is likely to decline towards the 50% & 61.8% retracement level of the previous rise which also coincides with the pattern target.
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