Accompanied by extraordinary volumes, the stock of ITC surged 2 per cent last week. Since early August, the stock has been consolidating sideways in the range between Rs.310 and Rs.331.
Currently, the stock is testing the upper boundary of this sideways range. It also faces its 200-day moving average at around Rs.335.
The daily relative strength index has entered the bullish zone from the neutral region. Both the daily and weekly price rate of change indicators hover in the positive terrain, implying buying interest.
Therefore, traders with a short-term view should tread with caution as long as the stock tests and remains in the sideways range. Only a conclusive breakout will be a cue for initiating long positions, with stop-loss at Rs.325.
Such a breakout can take the stock higher to Rs.340 and Rs.350. Key supports are at Rs.320, Rs.310 and Rs.300 levels.