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Auropharma - Breaking the trendline or not... Let's see

tushar
1/26/2016 10:12:38 PM
  1521
  1

Auropharma - Breaking the trendline or not... Let's see

Among the largest ' Vertically Integrated ' pharmaceutical companies in India, founded in 1986 by Mr. P.V. Ramaprasad Reddy, Mr. K. Nityananda Reddy and a small group of highly committed professionals, Auropharma is one the top pharma companies in India. 

Apart from the fame and name in the pharma business, Aurobindo Pharma has a shown outstanding performance in terms of price of its stocks in the Indian Stock Market. 

The stock was in a decent uptrend since last few years. If we watch it on monthly candle, the stock recorded breakout on September 2013 candle at the price of 101.17. It's a very well known secret, which is known by almost all the stock market investors and traders. 

The stock has recorded 29 monthly candles in this prolonged uptrend. Means total 29 months and among these 29 months, there are only 4 red candles and only 4 red doji's on the chart. Amazing performance. The high recorded was 891.50 in the month of December, 2015. But with the beginning of January, 2016, it opens at 879.9, hitting high of 886 and then coming down closing to 808.95 after touching low of 766.20. This is the story of monthly candle.
 
But here I want to talk about daily candle chart. On the daily charts, the counter had entered in a range bound up channel since March 2015. The same is shown in the image above. During this time period, the price was moving within the limits of this channel. Traders who had tracked this movement successfully must have earned good profits on both buying and selling side. 

At last, the price moving within this channel limits have broken the channel in the down side. Means the support line has been broken on 21st January, 2015. But the very next day, the chart shows a considerably big green candle of 2.8% and with this, the price again enter the uptrend channel. 

Now, one will think that entering the green channel is a sign of uptrend continue. Where is the fear of breaking the channel and beginning of downtrend? True, the price on closing basis on 21st January, 2016 was the proof of uptrend continuation. But, the candle of 25th January, 2016 is a matter of little bit worry. 

Just observe the candle of 25th Jan, 2016. What is the shape and size of the candle?
Its a spinning top candle. and that is also a bit gap up from the close price of previous day. This is the matter of concern. A gap up candle can result in a gap down red candle on the next day. This has happened quite some time on various charts. 

So, what to do tomorrow in this counter? Just watch the opening price of Auropharma tomorrow. If it is opening below the low of last candle and going down from there, the counter will dorm a red candle on the charts. And if the candle is of good size on the down side, it may record a close below the channel line, If this happens, it may result in a downmove. 

The matter is of consideration because along with daily candle, the counter has shown some bearish signs on the monthly charts also. If the monthly close will recorded below 875, then it will create a bearish pattern - engulfing on the charts. This will be the confirmation of down move in the counter.

Seeing its peers, almost all pharma stocks has shown down move in last few months. Now, is it the turn of Auropharma? Lets see...

Happy Trading...Trend is Friend...

Happy Trading...

Total 1 Comments

  • Parth Patel
    1/30/2016 6:16:29 PM

    Trendline

    Reply    Vote

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