Lupin: Bang on!! Power of Elliott wave

elliott wave lupin trading Aug 09, 2023
Lupin: Bang on!! Power of Elliott wave

We are seeing the best of Pharma sector stocks rally since past few trading sessions. We have been Bang on in anticipating this up move in Lupin.

We published detailed research on Lupin on 11th October 2022 and we achieved out target level as our studies showed.

Below is the chart we published in our monthly report, “The Financial Waves Monthly Update”

Lupin Monthly Chart (Anticipated as on 11th October 2022)

Lupin Daily Chart (Anticipated as on 11th October 2022) Wave analysis anticipated on 11th October, 2022

Nifty Pharma Index did register the new highs in the month of October 2021 however post that this index has been moving in a sideways to negative phase. Nevertheless, the stocks in the pharma space has performed individually in last few years. Stocks like Sun Pharma, Cipla, Dr. Reddy did recover from the lows and moved higher however stock like Lupin is still struggling and continues to trade near the lower range. Let us visit the long-term structure of this stock to understand the possibilities ahead.

Monthly Logscale chart of Lupin, the data available since the year of 2002 indicates that prices are into long term impulsive bull market. In the year of 2006, primary wave 1 completed whereas in the mid of 2008 primary wave 2 finished its course in terms of sideways action. After that we saw spectacular rise in form of primary wave 3 which completed in the year of 2015 and since then this stock has been trading with a downward bias in form of primary wave 4.

Triangle Pattern possibility and long term trendline: Looking at the internal structure of the fall, there is high likelihood that primary wave 4 has been forming Triangle pattern. Moreover, in terms of Fibonacci retracement, wave 4 has till now retraced about 38.2% of the prior primary wave 3. This also fits into the Elliott wave guidelines that Triangles are time consuming in nature whereas wave 4 has a tendency to retrace 38.2% of wave 3. Here we can see that prices breached the long term black upward moving trendline support in the year of 2019 and moved lower. In the year of 2021, prices retested the same trendline resistance and started to show weakness.  Going ahead, same trendline we can use to project the targets of primary wave 5 once we get the evidence of completion of primary wave 4.

In short, Lupin is one of the underperforming stocks from Pharma Index. Looking at the structure of this stock, one should look for range bound trading strategy. One can look for staggered buying approach with key risk management at 504 level on a weekly closing basis. On upside, we can expect prices to mean revert towards the trendline resistance which is placed near 900-920 levels. Also remember, as the time passes, this trendline resistance will tilt towards lower levels.


Lupin Weekly Chart (Happened as on 9th August 2023)

Post recommending this stock, prices moved as expected. Stock gave breakout of the Triangle pattern and achieved our target of 920. We have seen movement even beyond it as prices made high of 1109.  Prices from the lows moved more than 70% within 10 months of span.

Current rise looks to be in form of wave 5 but further price action is must which can give confirmation for the same. For now, one can use buy on dips approach to ride the trend as long as 900 holds on the downside.

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