NMDC approached the previously identified VRZ High at ₹88.75 and initially traded above the resistance zone, creating the appearance of a genuine bullish breakout.
At first glance, the move suggested that buyers had gained control and that the stock was preparing for further upside. The breakout attracted momentum traders and encouraged participants to anticipate a continuation rally above the resistance zone.
However, the market failed to accept prices above the VRZ.
Instead of sustaining at higher levels, selling pressure emerged almost immediately near the breakout area. Price gradually slipped back below ₹88.75 and started establishing acceptance beneath the VRZ High.
This transition confirmed a classic Breakout Failure (BOF).
As the breakout failed, breakout buyers started losing conviction and began exiting their positions. At the same time, fresh sellers recognized the rejection of higher prices and initiated short positions. The combination of long unwinding and new selling participation created a steady intraday decline.
The price action once again demonstrated an important BOF principle: when the market rejects higher prices after a breakout, trapped buyers often become the fuel for the downside move.
Many traders assumed:
The market disagreed.
When price moved back below ₹88.75:
This transition from optimism to uncertainty became the fuel for the downside move.
Trading above resistance is not enough. The market must sustain above that level.
The quick move back below ₹88.75 revealed aggressive selling interest and lack of buyer commitment.
Trapped buyers and fresh sellers frequently create sharp downside moves.
Waiting for BOF confirmation provided a significantly higher-probability short setup.
