ICICIdirect recommends buying Finolex Industries in the range of Rs 188-183 for target of Rs 220 with stop loss of Rs 174 on a closing basis.

Commenting on the rationale, the stock broker said, "Bulls took charge of the long term price trend in the stock after registering a breakout past the multi-year peaks of Rs 103 levels during mid-2013. After conquering the 2006, 2007 and 2010 peaks in May 2013, the subsequent revisit to the breakout area of Rs 103 during September 2013 garnered strong buying interest highlighting the change of polarity principle as per which a significant resistance once taken out, reverses its role and acts as a major support for future price action.

After retesting the major breakout area in September 2013, the stock witnessed a strong rally during October 2013 to early January 2014 rallying from Rs 108 to Rs 180 levels. The stock retraced its October 2013-January 2014 rally by just 38.2% (Rs 150) and formed a steady base above the same during January 2014 before resuming the upward momentum towards mid-February 2014. 

The stock is currently taking a breather to work off the overbought conditions developed during the February 2014 rally (Rs 148 to Rs 196) and, therefore, provides fresh entry opportunity to ride along the next upward leg. The price projection based on equality of the current up move from February 2014 low of Rs 148 with the preceding October-January up-leg (108-180 = 72) projects upside towards Rs 220 (148 +72).

Overall volumes have been consistently rising in tandem with the up move in prices while intermediate corrections are on the back of thin volumes. This corroborates the Dow theory principle, which says volumes should rise in the direction of the primary trend and highlights an overall bullish structure.

Among oscillators, the short-term stochastic has generated a positive crossover after the recent cool-off in prices indicating resumption of the upward momentum. Meanwhile, the MACD oscillator (E-12/26/9) on the daily chart remains in rising trajectory and is seen taking support at its nine period average suggesting a firm uptrend.''

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