We recommend a buy in the stock of Strides Arcolab from a short-term perspective. It is seen from the charts of the stock that in August 2011, the stock found support at around Rs 280 and resumed its long-term uptrend that has been in place from early 2009. But, the stock encountered resistance at Rs 430 in November and December 2011 and started do decline.

Subsequently, it formed a falling wedge that is a bullish continuation pattern. On Monday, the stock broke through this pattern and also a significant resistance at Rs 400 by jumping almost five per cent. Moreover, with this up move the stock has breached its 21- and 50-day moving averages conclusively.

We observe that there is an increase in volume over the past two trading sessions. The daily relative strength index has entered into the bullish zone and weekly RSI is inching higher in the neutral region. The daily moving average convergence divergence indicator has signalled a buy and is likely to enter the positive territory.

We are bullish on the stock from a short-term perspective. We expect the stock to move higher and reach our price target of Rs 420 or Rs 432 in the approaching trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 395.

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