Following a steady medium-term uptrend from the March 2014 low of Rs.240, the stock of Coal India encountered resistance around Rs.420 in early June 2014.
Subsequently, the stock reversed lower and moved in a sideways consolidation phase in the broad band between Rs.340 and Rs.400.
After testing the upper boundary consistently in late January, February and early April, the stock revered downwards again. Currently, the stock is in a short-term downtrend.
A strong fall below the immediate support level of Rs.355 can pull the stock down to the lower boundary at Rs.340 levels.
A decisive breakthrough of Rs.340 levels will have bearish implications and drag the stock down to the significant long-term support level of Rs.300.
Investors with a long-term perspective can consider holding the stock with a stop-loss at Rs.300. An upward bounce from the lower boundary will keep the stock’s sideways movement alive and take it to a high of Rs.380 and then to Rs.400.
The stock needs to decisively rally above Rs.400 to alter the sideways movement and push it higher to Rs.420 and then to Rs.450 in the long term.
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