Reliance Natural Resources Limited (RNRL) corrected sharply from the recent peak of Rs65 in early January 2009 to a low of Rs45. Since then, it rallied to a high of Rs55 last week. Since then, the stock has struggled to break past its 13-DMA.
On Wednesday, the stock fell below the short-term trendline and also closed below its near & short term averages. The daily MACD is already in sell mode suggesting build-up of momentum on the downside.
Based on above events, we recommend traders to SELL the stock on rallies to levels of Rs51 for target of Rs45. A stop loss of Rs 54.5 is recommended on all short positions.
Traders can again initiate short positions on a close below Rs44. As we expect to rebound in early trades, it is advised to initiate short positions at higher levels.