Saturday, 11 August 2012

Sunpharma Futures - EOD Analysis

Sunpharma has given a very big run and I'm a very big follower of it. I have been tracking it almost everyday and it made a low of 553 during last quarterly result period and from thereon the stock has run close to 30% up

Every stock that goes up has to get corrected no matter whether results are positive or negative basis technical analysis

Looking at the Elliot wave the stock has almost completed its wave 5 pattern and has high resistance in the band of 692 to 699. Very limited upside present and there is every chance of correction from hereon possible and it may go through Wave A,B & C phase for correcting

Looking at some of the leading indicators e.g. RSI, Stochastics and Williams%R, we are able to identify a pattern that all of them are in over bought zone which tells us that this stock will now correct its way down. Now always do not take correction as a negative factor. Stocks that are strong in charts when it corrects then it means that it is preparing for a further rally up

All the leading indicators mentioned above have shown a negative slope which confirms that a correction is on the way anytime. Similarly looking at price & volume indicator i.e. force index it also suggests that a negative slope is built and is shown in chart picture given below


Trend indicator MACD looks like it has reached its peak and a signal cross over may happen anytime

Summary

Short Sunpharma and look for a target of 658 with a SL at 701. Moreover on candlestick charts a DOJI sign has appeared and if correlated with technical indicators over bought zone, then the DOJI sign will bring a downward reversal to the pattern sooner this week & may be next week as well

However utilize this correction period and finally buy on dips around 658 levels


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