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Price, oscillators: Two ways to identify stocks that are likely to fall

Timing is everything. This is one rule traders who buy and sell stocks based on technical chart patterns swear by. While most market pundits and savvy investors give out tips on what and when to buy, the ‘sell calls’ are often missed. Both the components – the time to buy and time to exit a position are significant and have a bearing on the money/return you make. 

There are two ways to identify stocks showing a weak trend. One is on the price itself and other on oscillators or momentum. The price-based study involves several chart formations, including Head and Shoulder, Double Top, Rising Channel Breakdown, Triangles and Rounding Top. 

Even Candlestick patterns help to determine moves that the stock is likely to make in the sessions ahead. Some of the popular and widely used Candlestick patterns include Bearish Engulfing pattern, Bearish Harami, Bearish Harami Cross and Bearish Dark Cloud Cover. A gap-down close indicates selling pressure, which if not filled soon, can take the stock down further and dent the overall sentiment. 

Trendline also plays a crucial role. A break in the trendline on strong volumes breaks the positive sentiment. The Moving Averages also help in determining the medium-term outlook for the stocks, while a Crossover decides the trend that can significantly influence the direction.

At current levels where both the benchmark indices, Nifty 50 and the S&P BSE Sensex are trading with a cut of over 3 per cent from their respective lifetime high, the upside momentum seems to have fizzled out for now, technical charts suggest. Every reversal is being met with a strong resistance and this could be an indication of profit booking or selling pressure on an upside. 

Considering the current market trend where the upside looks capped, here are a few stocks that are showing weakness. Such counters vulnerable to a fall in the coming sessions on various technical grounds.