Relaxo sees a 46-day consolidation breakout! Time to buy?

Relaxo, one of the top trending stocks of the Nifty 500 surged over 5% on Friday.

Popular footwear brand Relaxo Footwears Ltd is engaged in the manufacturing and trading of footwear and related products. With a market capitalization of about Rs 25315 crores, it has a strong presence in the footwear industry. 

The stock of RELAXO jumped over 5% during Friday’s trading session. With this, it has registered a strong breakout from its 46-day consolidation pattern. It had been trading in a range of Rs 936-1016 with low volumes. However, the stock recorded above-average volume on Friday, which justifies the breakout. The volume is found to be greater than the 10-day and 30-day average volume. Moreover, it is now about 10% above its prior swing low.

With Friday’s price action, the technical parameters have been an improvement in the stock’s strength. The 14-period daily RSI (64.90) has jumped above its prior swing high and indicates good strength. The MACD has signalled a bullish crossover. The OBV has also improved, justifying good strength from the volume’s perspective. The Elder Impulse System has given a fresh buy signal. The Relative Strength (RS) has seen an improvement in the stock’s performance against the broader market. The stock is currently about 5% above its 20-DMA and 50-DMA and is about to test its 100-DMA as well.

The stock had recorded a lifetime high of Rs 1448 back in November. Since then, the stock has plunged by over 35%. Interestingly, the stock has formed a strong base near Rs 950 level and has seen strong buying emerging. The company management is positive about the business forecast for upcoming quarters. With this, the stock looks to aim for higher levels of Rs 1130, followed by Rs 1200 in the short to medium term. However, the level of Rs 936 can be detrimental. Also, the stock provides a favourable risk-to-rewards ratio for the medium term. Meanwhile, traders can include this stock in their watchlist to track its further development.