BSE Capital Goods- Relative Strength signaling RED FLAGS!

T_Harth Updated   
Attached: BSE Capital Goods/ BSE Sensex Daily Chart as of 13th April 2023

The Ratio Chart has given Warning Signals of what is about to come for the Capital Goods Sector, the Warning Signals are as follows:

1) A Broadening Wedge Pattern (see the Blue Trend Lines marking the Pattern)
2) A Double Top formation within the Broadening Wedge Pattern (see the Red Curve and the 2 Down Arrow Marks)
3) Triple Bearish RSI Divergence is also visible
4) MACD is currently in Sell Mode
5) ADX is below 25 meaning range bound (this means a Trend is about to start, biased for the Downside given the other signals)

All the Signals I have mentioned are Bearish for the Chart which mean that if it comes to play then the Capital Goods Sector (including Stocks that make up the Sector) would be confirmed to be an UNDERPERFORMER for the coming 2-3 Weeks (till the Downside Target gets met on the Ratio Chart at least)

You may look at Stocks within the Capital Goods Sector for Shorting as some of them have already given Sell Signals like L&T and SIEMENS (these 2 are on my radar)
Unless this Ratio Chart puts in a Higher Swing High, Setup for Underperformance Valid
Trade closed manually:
No Longer Bearish on Capital Goods Sector
But View has flipped to Bullish

because the Double Top has turned into a Triangle instead with an Upside Bias

Siddharth Bhansali

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