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The stock of Alembic Pharma, which has been trading in the band between ₹500 and ₹550 for the past three months, broke out of the range as the company’s joint venture received approval from US FDA for one of its drugs. The stock seemed to have pulled back after the breakout and is currently trading at ₹547.
The price action looks positive for the stock as it has been forming higher highs and higher lows recently, thereby, forming a higher base. Also, the stock is trading above both its 21-day and 50-day moving averages.
Because of the positive sentiment, the stock will most likely move upwards in upcoming sessions. Beyond ₹550, the medium-term trend will become bullish. Hence, traders can initiate long positions on dips, with a stop-loss below today’s low at ₹525, and look for a short-term target of ₹580 – the 61.8 per cent Fibonacci retracement level of the previous bear trend.
Over the medium-term, the stock has the potential to appreciate towards ₹614.
Supports: ₹520 and ₹500
Resistances: ₹580 and ₹614
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