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
Our first stock is
Cipla Ltd. Cipla is a famous large cap pharmaceutical
company. As per market leadership it is the 1st rank holder in respiratory and
third largest in India in domestic Rx market.
It has a market capitalization of ₹121271 crore, Stock P/E is 22.3, dividend yield is 0.87%, ROCE= 22.7 %, ROE= 17.8 %,
Current stock price is ₹ 1501.
See the weekly chart of Cipla how last week's candle closed below the 20
EMA line and RSI below 50( 46.50).
Our 2nd stock is Max Healthcare Ltd. The company is in healthcare segment providing different types of medical services. It is the largest healthcare company in terms of hospital chain and market capitalization.
It has a market capitalization of ₹ 111593 crore, stock P/ E is 93, dividend yield is 0.13 % , ROCE = 14.9 % , ROE= 12.7 %,
Current stock price is ₹ 1147.80.
See the weekly chart of Max healthcare how the price on weekly chart closed below the 20 EMA line and RSI is also moving lower below 50.
Our 3rd stock is Zydus Life Sciences Ltd. It is a pharmaceutical company in Zydus group. From 1995 to 2020 it has transformed ₹ 250 crore revenue to ₹14253 crore.
It has a market capitalization of ₹ 98052 crore, Stock P/E is 21.1, dividend yield = 1.13%, ROCE=24.3 %, ROE= 21.2 %,
Current stock price is ₹ 974.45.
See the
chart below of Zydus Life Science the weekly candle has closed below 20 EMA line, lRS has broken the
50.
(Stop- Loss in these stocks should be one candle close below 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.
