Price Action Trading Watch list | BEML Share Prices Shoots up 16%

BEML Stock prices gained 16% on Monday due to Stake sale decision of Government, one of the primary share holders in the company. The resulted Price behavior after the announcement was quite unusual, because divestment from a stock or an asset tends to depress the price value. But in case of BEML, previously known as Bharat Earth Movers Limited – Share prices jumped from 975.00 to 1100.00. This unusual behavior has confused market participants, but in my opinion – it’s primarily because of previously held short positions getting liquidated. This liquidation process is what pushing the prices upside.

Technically, prices reversed from earlier downtrend on December 2016. Shares rose from 800.00 and continued its directional bias towards upside. Recent announcement just accelerated this reversal process (Take a look at the chart). Prices spiked till short-term resistance level 1100.00 – 1150.00. Price spike that preceded the move was quite climatic – it creates the possibilities of a correction or a Minor selloff. I will patiently wait for seller’s reaction around the resistance zone. Based on their strength and weakness, I can take a trading decision. For now, the stock remains on my Price action trading watch list.