Last week, Tata Steel surged almost 6 per cent with good volumes. This upmove was triggered by a positive divergence in the daily relative strength index. To confirm the trend reversal, it is important for the stock to extend its uptrend and show signs of bullishness.
An emphatic rally above the immediate resistance at Rs.275 can push the stock higher to Rs.288 and then to Rs.300.
Traders with a short-term perspective should tread with caution and initiate fresh long position on a rally above Rs.275 with a fixed stop-loss. But, for confirmation of the ongoing rally, the stock needs to decisively move past the resistance level of Rs.300.
Such a break can take the stock higher to Rs.310 and Rs.320. However, inability to rally above Rs.300 will keep it moving sideways between Rs.250 and Rs.300. Key supports below are at Rs.240 and Rs.225.
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