What Can We Short Here?

JC Parets
January 28, 2021

We noticed a weakening momentum in several indices across the globe even as big talk of 'Budget correction' started to gain traction. In order to benefit from the short-term negative move, we identified strong and weak sectors over a short-term time frame. For the first time in a long time, we also shared a bearish trade idea in our Trade of The Week post.

Today we're going to look at some more short setups that are on our radar, in order to benefit from the dip in momentum we're witnessing.

Read on to know more.

 

The negative divergence we were observing in Nifty 50 last week has played out, with the index turning away from its highs. As more and more sectors feel the heat, we looked for some sell ideas from a short-term perspective.

First up we have Shree Cements. A double top formation has been reinforced by negative divergence and a breakdown. As price finds it difficult to move past the early 2020 highs, selling pressure could take the price lower.

We are bearish below 23,700 with a target near 21,500.

Click on chart to enlarge view.

Manappuram Finance has been struggling to move past 182 and has been in a sideways range for seven months. With the breach of 160, it looks like the price is now headed towards the lower end of the range near 140.

A double top pattern can be seen in this chart as well. We are bearish below the risk management level of 160, with a target close to 140.

Muthoot Finance has failed to move above 1300 and is indicating a weakening momentum with RSI making a lower low, even as price hovers near the support. Moving sideways since June last year, the price has breached the demand zone of 1,115 and seems to be headed towards the lower end of the trading range near 1,010.

We are bearish below 1,115 with a target near 1010.

The Energy sector has been reeling under pressure as well. Petronet LNG broke below the support of 246 as negative divergence continued to play out. As long as the price remains below 246, our bearish view will hold true, with a target near 225.

These are some of the short setups that stood out from an actionable point of view. There are several more ideas that we will be sharing with you in our Monthly Charts Strategy Session. Click here to Register.

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team

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