Cement stock outlook turns murky - Key levels to watch out for!

resr 5paisa Research Team

Last Updated: 21st April 2023 - 10:55 am

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The stock of Shree Cement witnessed a decline of over 2% on Thursday and from its swing highs which was formed in the first week of April, the stock has fallen nearly 9%.

Interestingly, this sharp fall from its recent swing highs, it has led to the stocks witnessing a breakdown of a bearish pattern known as a descending triangle pattern. The stock has witnessed the breakdown of this pattern on the daily chart and hence, provides fresh shorting opportunities! 

A descending triangle pattern is bearish in nature characterized by a descending upper trendline and a second, horizontal trendline. The stock is trading below its key short- and medium-term moving averages like the 20 and 50-DMA and both are in descending trajectory. The next major support for the stock is placed around its long-term moving average which stands at the level of Rs 23083. 

The MACD is below the zero line, and the histogram shows a decline in momentum. The 14-period RSI failed to sustain decisively above the 60 zone at the swing high and it is currently in the bearish zone as it has moved below the level of 40. The Elder impulse system has been forming a series of bearish bars, which is negative for the stock. The -DMI has managed to close above the prior swing high and it is in a rising trajectory above the 25-mark, which is an indication of bear domination. 

On the weekly chart, the RSI failed to cross the 60 level and the MACD generated a fresh sell signal. So, considering all the above-mentioned factors, the stock looks in the grip of bears and hence, looks for selling opportunities in the stock below the level of Rs 24280 with a stop loss of 24800 and a target of Rs 23360 on the downside. Below this level continue your short positions with a trailing stop loss for a much lower target in the stock.

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