Sun Pharma: Trading with Channels

We have always given emphasis to channels, as they play very significant role in determining resistance and support levels. Channels are categorized into 2 types

·         Rising channel
·         Falling channel

Rising channel occurs when prices are moving up by forming higher highs and higher low formation. This means that whenever, prices protects its previous low and crosses its previous high, rising channel can drawn by joining two highs and two lows.

Falling channel can be drawn when prices starts breaching its previous low and forms a lower high. This means that prices are moving in a negative direction. Connect two tops and bottoms to from a downward sloping channel.

Daily Chart

From the daily chart, we can observe that prices are moving lower by breaching its previous lows and it is moving precisely in a falling red channel. The stock has a very good support near 560 levels which is the upward sloping blue trend line of rising blue channel.

As seen in 60 mins chart, prices yesterday faced the resistance of the upper red trend line which forced the stock to move lower, this clearly indicates a supply pressure near 590 levels. The stock can now move lower till at least 565 levels over short term.

In short, as far as prices persists in the falling red channel our bias for Sun Pharma is negative as it can move lower till 565 levels over short term

It is important for traders and investors to be ready with their technical tools so that they don't miss the opportunity.


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