In the dynamic world of trading, identifying early signs of trend reversal is just as important as spotting a breakout. This week, based on our technical analysis, we have shortlisted 3 stocks from the broader market that have shown signs of weakness. These stocks have closed below the 20-day Exponential Moving Average (EMA) on the weekly time frame, which often signals the beginning of a negative momentum phase.
The 20 EMA is a widely-followed
short-to-medium-term trend indicator. While many traders use it on daily charts
to identify immediate price direction, its application on weekly charts provides
a more reliable picture of trend strength and longer-term
sentiment.
When a stock closes below its 20 EMA on the
weekly chart, especially after a sustained uptrend, it may indicate:
1. Exhaustion of bullish momentum
2. Onset of profit booking
3. A possible trend reversal
4. Entry into a corrective or bearish phase
Such a combination—price closing below the 20
EMA on a weekly time frame and RSI weakening below key
thresholds—should be viewed as a warning sign. It doesn’t
always confirm an immediate breakdown, but it raises red flags about
the stock’s near-to-mid-term strength.
If you are holding positions in any of these
stocks, it may be time to:
· Review your
stop-loss levels
· Consider partial
profit booking
· Avoid initiating
fresh long positions until price action stabilizes
· Watch for further
breakdown below support zones or formation of lower highs
For short sellers or traders looking for bearish
opportunities, these stocks can offer setups with favorable
risk-to-reward ratios, especially if the breakdown is supported by volume
or broader sector weakness.
Our first stock is 𝗚𝗮𝗿𝗱𝗲𝗻 𝗥𝗲𝗮𝗰𝗵 𝗦𝗵𝗶𝗽𝗯𝘂𝗶𝗹𝗱𝗲𝗿𝘀 & 𝗘𝗻𝗴i𝗻𝗲𝗲𝗿𝘀 𝗟𝘁𝗱. (𝗚𝗥𝗦𝗘) belongs to the
Defence Sector primarily responsible for catering to the Indian Navy and
Indian Coast Guard. GRSE is the first ship builders to export warships and
deliver to the Indian Navy and Indian Coast Guard. This company is diversified
and profit making company under the control of Ministry of Defence, Government
of India. It has a market capitalization of ₹ 32093 crore, stock PE=60.8,
Dividend yield=0.33%, ROCE=37.3%, ROE=28.1%, last closing price is ₹2802. See
the weekly chart of GRSE how it closed below the 20 EMA:
Our 2nd pick is 𝗠𝗮𝘇𝗮𝗴𝗼𝗻 𝗗𝗼𝗰𝗸 𝗦𝗵𝗶𝗽𝗯𝘂𝗶𝗹𝗱𝗲𝗿𝘀 𝗟𝘁𝗱., ., is a leading shipyard in India. It
is Mumbai based shipyard company established in the year 1774.At the
initial stage it was a tiny dock, from there it had been transitioned into a
prominent shiyard in India. It constructed so many vessels, cargoes, passenger
ships, warships, submarines since 1960.
It has a market capitalization of₹ 128053 crore,
stock PE= 53.1, Dividend yield=0.4y%, ROCE=43.2%, ROE=34%, last closing price
is ₹ 3174.See below the chart;
Our 3rd stock closed
below 20 EMA, on weekly chart is 𝗕𝗵𝗮𝗿𝗮𝘁 𝗗𝘆𝗻𝗮𝗺𝗶𝗰𝘀 𝗟𝘁𝗱.., is a Government of India enterprise and a
manufacturer of ammunitions and missile systems. It was founded in 1970 in
Hyderabad, India and had been working with the collaboration with Defence
Research and Development Organization. Its basic roll is to manufacturing weapon
systems. BDL has a market capitalization of₹ 68056 crore, stock PE=124,
Dividend yield=0.28%, ROCE=19, 6%, ROE=14.4%, last closing price is ₹ 1857.See
below the BDL weekly chart;
Stop- Loss in these stocks should be one candle close above 20 EMA line or as per individual risk appetite
Disclaimer: The information provided on MoneyWiseMind is for educational and informational purposes only. It is not intended to be financial advice, and you should not rely on it as such. Before making any financial decisions, you should consult a licensed financial advisor.
