Stock Radar: Ramco Cements forms Head & Shoulder pattern on weekly chart; what does it mean?

The Ramco Cements has fallen much more than 25 per cent in a calendar year in comparison to 10 for every cent upside found in Nifty50 and the chart sample implies that there could be a lot more soreness in the offing.

The stock has been on sellers’ radar and has fallen additional than 36 for every cent from its 52-7 days substantial of Rs 1,130 recorded on 20 July 2021 to Rs 721 on 10 Might, 2022.

The steep drop pushed the stock down below its important small and extended-expression going averages of 5, 10, 20, 50, 100 and 200-DMAs which implies bears could keep on being in control.

The stock shaped a ‘head and shoulder’ sample on the weekly charts and is on the verge of a clean breakdown underneath the neckline of the sample development.

‘Head and shoulder’ patterns takes place when the center peak is considerably increased as opposed with the left and appropriate peaks, which are at very similar ranges.

Ordinarily, the intervening bottoms also occur at the similar amount. The line connecting these two bottoms is named ‘neck line’ and promote sign is created when rates go down below this neckline.
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A break down below Rs 700 could gasoline additional providing pressure which could choose the inventory towards Rs 580 in the following 4-8 weeks, propose professionals. A end loss could be placed over Rs 785.

On complex charts, the inventory can be observed buying and selling below force at any time since rates fell underneath Rs 920 degrees in latest earlier just after a prolonged consolidation phase.

“A handful of weeks back again, the stock gave breakdown under its 200-day exponential going typical on weekly charts which factors out in the direction of alter of pattern in price ranges from a medium-phrase standpoint,” says Shitij Gandhi, Senior Specialized Analyst, SMC Worldwide Securities.

“At latest juncture the stock has also shaped a Head & Shoulder sample on weekly charts and is on the verge of a fresh breakdown below the neckline of the sample development,” he added.

The negative divergence on secondary oscillators along with earlier mentioned-ordinary volumes with a drop in rates signifies that major current market contributors are in favour of bears which factors in the direction of confined upside in rates.

“The immediate support for the stock is placed at Rs 700 ranges, below which we can hope more offering stress,” describes Gandhi.

(Disclaimer: Tips, solutions, sights, and opinions specified by the professionals are their personal. These do not symbolize the sights of Financial Moments)