SRF needs a decisive range breakout for next leg of rally

Considering the daily time frame, the stock of SRF Limited has been trading in the range of Rs 3,529-Rs 3,757 since the last 20 trading sessions. With the sideways price action, Bollinger Band has narrowed substantially and the stock is likely to give a consolidation breakout in the coming days.

The major trend of the stock is bullish as it is trading above its weekly pivot and above its long and short-term moving averages, i.e. 20-week, 50-week, 100-week and 200-week EMAs and these moving averages are exactly in an ascending order, which suggests that the trend is strong. The stock’s relative strength index (RSI) is hovering in the range of 60-50 since the last 20 trading sessions, suggesting the lack of a clear trend. Meanwhile, other indicators are also mirroring the same image.

Going ahead, a consolidation breakout or breakdown below some important support/resistance level with supportive volumes will lead to a major advance or decline. The zone of Rs 3,545-Rs 3,525 level is a crucial support area for the stock and the level of Rs 3,760-Rs 3,780 is the resistance zone. A sustainable move on either side would lead to a trending move.

On Friday, the stock of SRF Ltd dipped by 0.28 per cent and closed at Rs 3,643.9 per share. Meanwhile, the stock opened at Rs 3,668.70 per share and hit an intraday high of Rs 3,683.65 and a low of Rs 3,630 per share on BSE.