Stock Trading with Sector Analysis

Pharma Stocks 

Pharma Sector saw a good rally few days back but started correction next week. This was not a downtrend but just profit booking, which generally takes support at Moving Averages or Fibonacci levels as shown in the chart. Thats why both price levels have been shown above. So, from the chart, it is evident that profit booking is about to get over in pharma sector and sector can see rally continuation soon.

Following chart combines both price levels

Sun Pharma

It is very much clear from the chart that Sun Pharma is exactly following the pattern of Sector chart. Even Sun Pharma is about to take support soon and ready to bounce back for rally continuation as shown in the charts above. Moving Averages or Fibonacci should be considered as support levels. Let us combine both the indicators and then understand how to take trading decisions based on this charts

Trading using chart

As shown by arrow which is at 50%, it looks like correction should be over and the moment stock turns green (means positive indicating price is rising) on watchlist, traders tend to enter at this levels. My suggestion would be to wait for Stock to sustain above 1030 levels for at-least an hour. if it sustains, then  we can buy stock. But it seems to be least likely looking at MACD. I expect stock to correct a little bit, just like CNX Pharma. My first level to watch should be 1014 (EMA 50 as shown in chart), and if stock breaks that level also then I can buy with full force at up-to 990 levels (61.8%), provided no negative news comes out to drag stock down. So, to prevent loss from uncertainty, Stop loss should be at 4-5 Rs below 61.8%. levels (985). But we should not wait for stock to reach bottom lines, rather we should start buying stocks at more dips for uptrending stocks and keep on averaging it at lower levels.

Wockpharma

As can be seen on charts, Wockpharma is already on 50 EMA support. So, one may think that correction (profit booking) is over and stock can bounce back from here. But as we saw Pharma sector, it still has some potential to dip, so be cautious before buying it. But ofcourse, it is a uptrending stock, we can think of buying on dips and averaging it

Now lets look at Fibonacci levels which gives better and more reliable levels of price corrections

As in sync with Pharma sector, 38.2% is at 1565, where stock should find strong support. But it doesnt mean we should wait for that level to come. As can be seen, Stock seems to be taking reverse from 50 EMA. So buying on Dip and averaging the stock will b a good strategy.

Stop loss should be below 1565, i.e. around 1560 for any uncertainty

Combined Chart for convenience

Final Note: Above comments are made on Daily charts and should not be used for Intraday trade. Analysis done on Daily charts should e used for swing trading decisions (means 1-2 weeks time frame for acheiving target)

Disclaimer: I am an independent trader and I may or may not trade on calls I generate. The sole purpose of blog is learning and author is not responsible for loss made on trades executed on calls generated here. So take your own trade decision wisely