Futures Trade Alert: Tata Motors Witnesses Rising Channel Breakdown
Tata Motors' recent price movement has led to a breach of its rising channel support, a significant technical signal. Additionally, the Relative Strength Index (RSI) has indicated a breakdown within a specific range.
Further accentuating the change in trend, the Moving Average Convergence Divergence (MACD) indicator has exhibited a bearish crossover. These combined indicators suggest a potential weakening of the prevailing trend.
Considering these factors, a short trade opportunity presents itself in the futures market (please note that the prices mentioned herein are in reference to the spot prices).
To initiate this trade, a potential entry point lies below 613. It's advisable to consider an equal lot hedge by purchasing a 610 call option with an approximate premium of 22 - 21 (purchasing this option acts as a hedge), simultaneously executed alongside the short trade.
This analysis points toward a potential price decline, with indications pointing to levels around 600 and potentially lower, within the range of 592 - 580. However, prudent risk management is crucial, and thus a stop-loss should be set above 625 on a daily closing basis.
To optimize the trade strategy, the short trade and hedge can be closed simultaneously, aligning with a holding duration of 2 - 3 trading sessions. It's important to note that the suggested trade should be disregarded if the prices exhibit a significant gap up or down during the trade initiation phase.
Tata Motors' recent price behavior has triggered technical signals that suggest a potential downturn. A short trade, in conjunction with a call option hedge, can be a strategic approach to capitalize on this anticipated trend reversal.
As always, careful attention to risk management and market conditions is essential when executing such trades.