Tata Steel in a near-term downtrend

Last week, the stock of Tata Steel continued its downtrend declining 4.2 per cent with heavy volumes. 

The stock is on a downtrend across all time-frames — long, medium and short term. Nevertheless, the stock has a significant long-term support in the Rs.195-200 range. 

The moving average convergence divergence indicator on the daily chart shows positive divergence implying that a trend reversal is possibly on the cards. 

Traders with short and medium-term perspective should tread with caution in the coming weeks as the stock may test the support zone. 

The stock’s immediate resistance is placed at Rs.230 and the next one at Rs.250. A decisive upward breakthrough of Rs.250 is needed to alter the short-term downtrend. 

Resistances beyond Rs.250 are at Rs.265 and Rs.280 levels. But a fall below Rs.195 will keep the downtrend intact and drag the stock to Rs.175 levels.