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| Sun Pharma Weekly chart (Chart source: Investing) |
Sun Pharma has been in a downtrend since April 2015, with each low breaking below the previous low and each high failing to cross the previous high.
This sequence has now ended as the stock has broken above this three-year trend line. Also observe that the trend line breakout has been accompanied by a breakout of an ascending triangle pattern that was forming since July 2017. These simultaneous break increase the probability of a change in trend from down to up.
This sequence has now ended as the stock has broken above this three-year trend line. Also observe that the trend line breakout has been accompanied by a breakout of an ascending triangle pattern that was forming since July 2017. These simultaneous break increase the probability of a change in trend from down to up.
The price action has been confirmed by technical indicators as well. The weekly MACD line and its signal line have entered the positive zone for the first time since early 2016. Also, the weekly OBV indicator has risen to its highest level since April 2015, suggesting that the selling pressure is receding. Immediate resistance is seen around 610, which marks the 23.6% retracement of the entire fall (on a closing basis). Break above this resistance would open door for a 15-20% rally in the medium term. Alternatively, break below 550 would invalidate the bullish implications of my view.
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