From the daily chart of Dr.Reddy’s Lab featured below, it’s apparent that the prior fall was arrested right at the down-sloping red trendline and the price has since been on a recovery path.
The short-term outlook is bullish and a rally to Rs.1,770 appears likely. The stop-loss for long trades may be placed at Rs.1,560. We shall discuss higher targets once the initial resistance at Rs.1,770 is overhauled.
Those interested in understanding the mechanics of price action may pay attention to the last couple of price bars in the chart. On Friday, the price cracked sharply and also closed below the minor swing low of Rs.1,614. The sharp recovery witnessed today is a sign that the buyers are in control. This could be a classic case of Wash n’ Rinse of the breakout sellers.
Just in case my reading of the price action goes away, the stop-loss at Rs.1,560 would come in handy.