Hello Friends,
Once Again Posting a Simple and Beautiful Chart Setup !!
Stock in Discussion Today will be : AURO PHARMA LTD.
The Stock Currently trading @ 746 cash levels and 750 Sept Futures.
As usual, Without wasting time let's go to the charts.
First of all we will see smaller term chart for the first time... We usually see charts from Higher to Lower timeframe. This time it is exactly reverse.
This is H4 time frame chart, We can see the price is moving along a rising trendline and respecting every support on the trend line. While moving on a rising trend, the stock price corrected from recent high's to reach the trendline and while correcting and reversing from trendline support, the Price is forming a Bullish Chart Pattern Called "Inverted Head and Shoulder". The Chart Pattern is Very much dependable and the results are always good. The Neckline of the Formation is placed around 750 levels and break above the Neckline will be considered as a breakout. The Neckline resistance is tough to break and a closing above the neckline is important for the confirmation of the breakout. Once breakout is done, We may enter longs and carry till the price breaks the rising trend line. The Target of the breakout is placed around 810 levels, which is a resistance at 811.95, we may place our Take Profit orders around 810 levels once entered the trades.
After the breakout confirmation on H4 Chart, Let's see Higher time frame chart
This is a Daily time frame chart, We can see The price moving along the rising channel after breakout from the falling trendline. The Price is forming a Strong Bullish Chart Pattern Called "Cup and Handle". The Neckline is placed around 794 levels for the formation. Once the Stock crosses 794 levels and sustains above the level, we will see 893 targets in few weeks on the stock.
Important thing to look here is, smaller timeframe chart is preparing ground and supporting to gather strength for a breakout on bigger time frame. Lower timeframe breakout target comes around 810 and bigger timeframe breakout is seen at 794 level which is lower than the target of smaller timeframe breakout. So for me breakout above 750 is more important than breakout of 794, the reason is simple. Once we breakout at 750 levels, in attempt to achieve Target of the breakout, Price will automatically clear the upper breakout area leading to Higher targets.
Stoploss for all the move will be nearest Trendline support around 725 levels. So For me Entry around 750 Levels and Stoploss around 725 levels with a Target of 890 levels will be a good trade setup, which is 25 points of Risk, and around 140 points of Reward almost 1:6 Risk Reward ratio. Anything above 1:1 Risk Reward is always Good but a 1:6 Risk Reward is always a Nice Opportunity.
For Future Traders, Lot size of the stock is 800, So Risk is Approx 20000 and Reward will be approx 112000 at the Higher Target.
Recommendation :
AUROBINDO PHARMA LTD.
Buy Above 750 Levels
Stoploss around 725 Levels
Targets : 810 - 860 - 890
Traders are Advised to follow proper Risk Management while entering the trade and always advised to consult your Trading adviser before Placing any trade. If you don't have a Trading Adviser, On First Priority Get associated with someone. The Adviser has posted his opinion and He Reserves all the Rights to be Wrong in his Chart reading.
Disclaimer :
Atul S Shinde, The Analyst and Writer of this post is a Global Market Expert and SEBI Certified Investment Adviser. He is a Independent Financial Adviser not associated with any company. He or His Clients May have trading / Investing Positions in the Analysed Stock and The Analyst doesn't have any Conflict of Interest in the analysis.
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