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BIG Triangle Breakout: Stock Soars 11% to Begin Uptrend!

Published 09-07-2023, 01:39 pm
MROT
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Despite a weak trading session on Friday, the share price of MRO TEK Realty Ltd (NS:MROT) was on a roll. This is a micro-cap company that is in the business of manufacturing, supply and distribution of access and networking equipment and solutions and solar-based power systems, having a market capitalization of only INR 100 crores.

As this is a very small company, the volume of trading in this counter is quite less which is one of the reasons why the stock was able to deliver a sharp rally on Friday. As the stock was consolidating in a range since March 2023, the highs and lows were consistently contracting which formed a symmetrical triangle pattern on the daily chart.

Image Description: Daily chart of MRO-TEK Realty with volume bars at the bottom

Image Source: Investing.com

This pattern represents volatility contraction and therefore a move above/below the resistance/support can propel the stock in that direction. On Friday, MRO-TEK Realty shares rallied 11.3% to INR 59.9 and soared past the falling trendline resistance. This price action is setting a bullish tone for the coming time.

The volume backing the move also expanded to 404.4K shares which was a whopping 6,083% higher than the 10-day average volume of 6.54K shares. This low volume is the reason traders should be cautious before taking a large position as lower liquidity increases the impact cost of the trade.

Nonetheless, the stock is looking quite bullish and it can be put on the watchlist in case traders are looking for some long opportunities. The next level to which it can rally is around INR 70 which can come on the screen quite quickly, all thanks to high investors’ interest.

Managing risks in such counters is extremely crucial and trading these stocks should not be done without a pre-determined stop loss level. In this case, a level below the lower trendline, at INR 52 can be used to exit if the stock takes a U-turn. This trendline can be extended as time passes by to trail the stop loss.

Read More: Triangle Breakout at ATH; Stock Continues Bull Run!

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