Range Breakout: A Large-Cap Gearing Up for a ‘Quick Move’!

  • Stock Market Analysis
  • Editors Pick

The last session of FY23 was extremely good, with all sectors witnessing investors’ demand. The large-cap index Nifty 50 itself rallied 1.63% to 17,359.75, clocking its biggest one-day gain (in %) after November 2022, all thanks to a 4.31% rally in the largest heavyweight - Reliance Industries (NS: RELI ).

As the Nifty 50 index has finally changed its trend to the upside, it might be a good idea to look for stocks on the long side. One such counter from the F&O space is Trent Limited (NS: TREN ). It is a large-cap retailer of ready-made garments, having a market capitalization of INR 47,491 crores.

Image Description: Daily chart of Trent with volume bars at the bottom

Image Source: Investing.com

The share price of Trent had been consolidating in a very narrow range since 10 February 2023. The forces of demand and supply were almost deadlocked as bulls kept buying the support and bears kept offloading their holdings near the resistance. The range that got established is INR 1,275 (support) and INR 1,370 (resistance).

It seems like the stock was waiting for the broader market to get in a good mood, as on Friday, the stock surged past the resistance and closed above it on a weekly basis, at INR 1,374.95. This price action is defining a breakout in the security and therefore short positions from here might not have a high probability to stay in the green.

Ideally in a range breakout, traders can place a stop loss just below the resistance which gives a very good risk-to-reward (R:R) ratio. Some conservative traders also place a stop loss below the support of the range, which reduces the R:R but significantly increases the probability of winning. So, there is a trade-off and traders can decide for themselves how they want to play the upside move.

As per the height of the range, the rally from here could stretch to around INR 1,470 and at INR 1,480 there is strong resistance. Therefore short-term move should be booked once traders meet their targets.

Read More: 3 Simple Ways to Improve Your Options Trading

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

  • Adnan Mevliwala @Adnan Mevliwala
    breakout was trap.. soon it will go below 1300 again
    Like 0
  • sunilkumar tejwani @sunilkumar tejwani
    Nice observation.
    Like 2
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Thank you :)
      Like 1
    • Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or


Related Articles