Aurobindo Pharma bounces from upward sloping trendline support

Considering the weekly time frame, the stock of Aurobindo Pharma has given a bounce from the edge of the upward sloping trendline support formed by joining swing lows form June 2017. Additionally, the stock had formed bullish engulfing candle on a weekly scale, which predicts bulls are taking control near the support zone.

The stock after a span of almost four months has managed to successfully close above its crucial short-term moving average i.e. 20-day EMA. The reversal was confirmed by the above 50-week average volumes. From a momentum oscillator perspective, the 14-period weekly RSI is currently quoting at 39.52, and it has recently given positive crossover. The stochastic oscillator is also suggesting some bullish strength as %K is trading above the %D. There has been a positive divergence between the weekly RSI, weekly stochastic and the stock price movement, which suggests limited downside. Moreover, the Ichimoku chart on the daily time frame is clearly giving a positive view as it closed above the KS and TS lines.

Going ahead, we expect the bias to remain positive as long as stock sustains above the Thursday low of Rs. 571.65 level. On the higher side, the level of Rs. 645, followed by Rs. 677, would be seen as the next resistance zone for the stock.