Short-term technical outlook for Tata Steel

At Wall Street, selling resumed on Friday, with investors spooked by another hot inflation update. A solid reading on consumer sentiment only created stiffer headwinds for the major indexes, with the broad market suffering its worst weekly loss of the year.

Talking about Indian markets, the NSE benchmark Nifty50 declined more than 2.5% on a weekly basis and one of the worst-performing sectors was Nifty metal as it plummeted over 6% in the last week. Considering the overall structure of the market remains fragile, with global cues adding insult to injury, one needs to look for some set-ups on the short. Nifty metal is a place to look and hence, Tata Steel is the stock, which can be on traders' radar for a short trade.

Here's why:

The stock had declined over 2% on Friday and on a weekly basis, it was down by 2.23%. It has broken the bearish flag pattern with a higher volume than the previous five days. The flag pattern formed between 23.6% and 38.2 %retracement levels of the prior uptrend. It closed below all key moving averages and the moving average ribbon is in a downtrend. It is 3.31% below the 20DMA and 4.41% below the 50DMA. It declined below the Ichimoku cloud, which is bearish. The MACD is below the zero line, and the RSI is about to enter a strong bearish zone. The Elder impulse system has formed a strong bearish bar, while the KST and the TSI have been in the bearish zone, closing just closed below the Anchored VWAP support. In short, the stock broke the bearish pattern. A move below Rs 109 is negative, and it can test Rs 103. Maintain a stop loss at Rs 113. Traders may continue holding their short position below Rs 103 for a lower target of Rs 97, however, in that case, trailing stop loss is mandatory.