Bombay Rayon Fashions

Traders with short-term trading perspective can buy the stock of Bombay Rayon Fashions. Since August 2009, the stock has been on a broad sideways consolidation in the range of Rs 180 and Rs 220. Though the stock tested the upper boundary in January and February, however, it failed to breakthrough. The stock is trading well above its 21 and 50-day moving averages and is re-testing the upper boundary.

There has been an increase in volume over the past three trading sessions. The daily relative strength index has entered in to the bullish zone and weekly RSI is on the verge of entering this zone. Both the daily and weekly moving average convergence and divergence indicators are featuring in the positive territory and the daily MACD has signalled a buy. Moreover, within this consolidation, the stock has been on a medium-term uptrend since December 2009. Considering that the medium-term up trendline is in tact we are bullish on the stock from short-term perspective.

We expect the stock to penetrate the upper boundary and rally until it hits our price target of Rs 245. Traders can consider buying the stock while maintaining stop-loss at Rs 211.

via BL