Chart Check: Rectangle pattern breakout could take this pharma stock to fresh 52-week highs in next 3-6 months

Alkem Laboratories, part of the pharma sector, gave a breakout from a rectangle pattern on the weekly charts which has opened room for the stock to hit a fresh 52-week high in the next 3-6 months, suggest experts.

The pharma stock hit a fresh 52-week high of Rs 3,584 on 5 April 2022, but it failed to hold on to the momentum. The stock did make a bottom around Rs 2,835 on 16 May 2022 before bouncing back.

The stock took support above the 200-WMA in the last week of February before bouncing back.


Alkem stock price largely moved in a range from May 2022 where Rs 3,300-3,400 acted as a stiff resistance while on the downside Rs 2,800 acted as a crucial support on the weekly charts.

The stock gave a breakout from a rectangle pattern on the weekly charts in the last week of March 2023. The Supertrend indicator also triggered a bullish signal on the weekly charts last week.

In terms of price action, the stock price is trading above most of the short- and long-term moving averages of 5,10,30,50,100 and 200-DMA on the daily charts.

When compared to its peers and the Pharma Index, the stock of Alkem Laboratories has demonstrated a remarkable level of resilience and strength post-May 2022.

“Despite market volatility and fluctuations, the stock of Alkem has not experienced significant corrections, which indicates that it has been able to maintain its value and perform relatively well in comparison to its industry counterparts,” Omkar Patil, Technical Research Associate at GEPL Capital, said.

“The stock has witnessed a breakout of the rectangle pattern indicating reversal to the uptrend. The breakout was preceded by a shortfall in the pattern which shows strong enthusiasm behind the prices,” he said.

The stock on the daily timeframe has recently witnessed a golden cross of 50 and 200-days EMA which confirms the reversal. The weekly Relative Strength Index (RSI) has shown a breakout too which reflects rising momentum in the prices.

“Based on these technical indicators, it is expected that the stock's prices will continue to rise towards the level of Rs 3,950 in the next 3-6 months, with a recommended stop loss at Rs 3,160 on a closing basis,” recommended Patil.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of Economic Times)