Thanks to an initial rally, the stock of Tata Steel recorded an intra-week high at Rs.276. But it later reversed direction, being choppy and declining 1.4 per cent during last week.
Currently, the stock tests a key support at Rs.250. An emphatic fall below this level will weaken the stock and drag it down to Rs.240 and then to Rs.225 in the short term. The indicators in the daily chart show signs of bearishness.
Traders can wait and consider initiating fresh short positions on a strong decline below Rs.250 with a stop-loss at Rs.255. The stock can extend its decline to test supports at Rs.240 and then at Rs.225 levels in the short term.
To alter the short-term uptrend that has been in place for sometime now, the stock needs to breakthrough the support at Rs.225. It can thus decline to Rs.215 or Rs.200 in the short to medium term. Significant resistances beyond Rs.263 are at Rs.276 (200-day moving average) and Rs.281.