Trade Talk: Is Vaibhav Global, a good opportunity to short?

Vaibhav Global was in a rally since March 2020 and took a breather in May 2021. So, is this stock a good opportunity to go short? Let’s find out.

Post making a low of 88.15 in March 2020, Vaibhav Global made a high of 1046.85 in May 2021. This is almost 11-fold growth in just a matter of one year. However, in the month of May 2021, the stock plunged almost 21%. Moreover, since then it is moving downwards. This week started October 25, 2021, the stock breached its crucial support level and continued its southward journey.

Vaibhav Global Limited has a distinctive business model as it engages in the global retail space, specifically in the jewellery, accessories and lifestyle product segments in the US and UK.

Since March 2021, it was respecting 714-694 levels which also is the stock’s strong support zone. On October 25, 2021, the stock breached the above-mentioned support zone. Interestingly, it also tried to breach this support turned resistance zone on October 27, 2021, but failed to do so moved back downward.

Therefore, this can create a good opportunity to go short. However, there are some critical things to keep in mind. The stock has immediate resistance placed at 649-681 and short-term resistance being 694-714. If this is breached, then the bearish view fails. More importantly, the stock presently is trading near its crucial Fibonacci level of 50% (567.5). So, there are some chances of stock retracing from this level. If this level is breached then the stock is likely to further move downward.

Having said that, on daily charts, the stock is trading below its 50-Day Moving Average (DMA) as well as its 200-DMA. However, we haven’t seen any negative crossover of these two moving averages. Even the Relative Strength Index (RSI) is trading near the oversold zone. Therefore, it makes complete sense to adhere to strict stop losses while going short on Vaibhav Global.

At the time of writing, the stock of Vaibhav Global was trading at 580.