Break-out Trade in Sun Pharma

The stock of Sun Pharma recently touched a price of Rs.860, showed a long term break out on the charts. This happened with a long bullish candle, showing signs of a possible bullish break out with volumes. But a better way to ratify such decisions is based on the combination of oscillators and moving averages.

How does Sun Pharma look based on Oscillators?

Here is a gist of the Sun Pharma oscillators as of latest available price and volumes data.

1) The RSI or relative strength index of Sun pharma stands at around 67.6. Normally, 70 is an overbought zone and 30 is an oversold zone. This is closer to the overbought zone and if you combine the RSI with the MFI indicator, it is showing signs of being in the overbought zone. That may be a medium term resistance for the stock.

2) However, if you look at the Moving average Convergence Divergence (MACD) indicator for Sun Pharma, then the indicator is fairly bullish. The MACD signal at 18.1 is above the MACD signal line at 15.5, which is an overall bullish signal. 

Broadly, the RSI is neutral while the MACD is bullish for the stock of Sun Pharma. Let us now turn to the moving averages.

What do the Moving Averages indicate about the Sun Pharma stock?

Here is a gist of the moving averages for Sun Pharma.

1) For the 10-day and 20-day moving averages, the simple moving average indicator and the exponential moving average indicator are giving a bullish signal with the price line breaking above the moving average line.

2) For the 30-day and 50-day moving averages also, the simple moving average indicator and the exponential moving average indicator are giving a bullish signal with the price line breaking above the moving average line.

3) Finally we have also considered the 100-day and 200-day moving averages, wherein the simple moving average indicator and the exponential moving average indicator are giving a bullish signal with the price line breaking above the moving average line.

To sum it up, Sun Pharma has given a clearly positive breakout on the upside based on moving average indicators. This is clear across various time frames. However, in terms of oscillators, the signal is neutral to positive with one attribute being positive and one attribute being neutral.

To sum it up, the long bullish candle showed by Sun Pharma when it decisively broke above the Rs.850 mark appears to be genuine signal of an upside break out. We need to observe volumes for more confirmation.