The stock of United Phosphorus was on a medium-term sideways consolidation in the broad range between Rs 125 and Rs 150 for the past three-and-half months. It gained 3.7 per cent with good volume breaking through its upper boundary and key resistance at Rs 150 on Friday.

There is an increase in daily volume in over the past three sessions. The stock has surged 7.6 per cent in the previous week. With this gain it appears to have resumed its intermediate-term uptrend that has been in place from its April low of Rs 113. Moreover, the stock has conclusively breached its moving average compression (21-, 50- and 200-day moving averages) at around Rs 137 and hovering well above them.

The daily relative strength index has entered the bullish zone from the neutral region and weekly RSI is on the brink of entering the bullish zone. The daily moving average convergence divergence indicator is moving higher in line with the stock price in the positive territory indicating upward momentum. Both daily and weekly price rate of change indicators are hovering in the positive terrain implying buying interest. Short-term outlook for the stock is bullish. Its uptrend can continue and reach the price target of Rs 160 or Rs 163 in the approaching trading session. Traders with short-term horizon can buy the stock with stop-loss at Rs 150.2 level.

(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

(This article was published on October 6, 2013)
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