How 138% Gains Were Achieved in Auropharma

Have you ever wondered how disciplined traders achieve exponential returns from the stock market while keeping risks in check? In this blog, we’ll decode the remarkable 138% gain achieved in Auropharma through a well-crafted strategy using Exponential Moving Averages (EMA), Relative Strength Index (RSI), and Volume Analysis. This powerful combination not only identifies winning trades but also provides a framework for entering and exiting with confidence.

The Secret Ingredients: EMA, RSI, and Volume

This strategy is based on the interplay of three technical indicators:

1. EMA Crossovers:
   The strategy revolves around the 10 EMA (short-term) and 20 EMA (medium-term) crossover. When the 10 EMA crosses above the 20 EMA, it signals a bullish trend—a key entry point.
2. RSI Confirmation:
   The Relative Strength Index (RSI) confirms the momentum of a stock. An RSI reading above 60 often suggests strong bullish momentum, further validating entry signals.
3. Volume Breakouts:
   Volume is a critical metric for gauging market participation. High trading volumes during an EMA crossover or breakout indicate strong investor interest, minimizing false signals.

Breaking Down the Trade: Auropharma’s Journey to 138% Returns

Step 1: The Setup (Sideways Consolidation)

In 2021–2022, Auropharma’s price traded in a prolonged sideways channel, marked by a descending trendline. This phase of low momentum often precedes a breakout. Savvy traders recognize such patterns as “quiet accumulation” periods.

• Key Observation: During this phase, volumes were low, and the RSI stayed below 50, indicating lack of interest from buyers.
• Tip: Patiently wait for a breakout when prices start consolidating within a narrow range.

Step 2: The Entry (EMA Crossover + RSI Confirmation)

In early 2023, Auropharma showed the first signs of life when:

1. 10 EMA crossed above 20 EMA, signaling the start of a bullish trend.
2. RSI breached 60, indicating strong buying momentum.
3. Volume spiked significantly, suggesting institutional participation.

These three factors aligned perfectly, making this a textbook entry opportunity. Traders who acted on this signal entered around the ₹400-₹450 range.

Step 3: The Rally (Momentum and Volume Expansion)

Following the breakout, Auropharma embarked on a powerful rally, climbing steadily to reach its peak at ₹1,340—an astonishing 138% return.

• Why it Worked:
  • EMA acted as a dynamic support, keeping traders aligned with the trend.
  • RSI consistently stayed above 60, confirming bullish momentum.
  • High volumes throughout the rally validated the sustainability of the uptrend.
• Pro Tip: Use trailing stop-losses to lock in profits as the stock climbs higher, especially during extended rallies.

Step 4: The Exit (10 EMA Crossing 20 EMA)

Every rally eventually ends, and knowing when to exit is just as critical as entering. In late 2024:

• The 10 EMA crossed below the 20 EMA, signaling the end of the bullish trend.
• RSI dropped below 50, confirming fading momentum.
• Declining volumes added further evidence of waning investor interest.

Exiting near the ₹1,250-₹1,300 level preserved the bulk of the gains, avoiding the subsequent downturn.

Why This Strategy Works Consistently

Clear Rules: This approach avoids guesswork by relying on objective signals like EMA crossovers and RSI levels. Risk Management: By waiting for confirmations, false breakouts are minimized. Momentum-Focused: The RSI ensures trades align with strong trends, while volume confirms the market’s conviction.

Lessons for Aspiring Traders

The Auropharma trade highlights the importance of discipline and patience in trading. Waiting for all indicators to align ensures higher probability setups, while following clear exit rules protects gains. This simple yet effective strategy can be replicated across various stocks and timeframes.

Final Thoughts

Mastering technical analysis is like learning a new language—it takes time and practice. But as this 138% gain in Auropharma shows, the rewards are well worth the effort. Whether you’re a beginner or an experienced trader, combining EMA crossovers, RSI, and volume analysis can help you trade with confidence and consistency.

Do you want to learn more about trading strategies or need help analyzing your charts? Let me know how I can assist!

Disclaimer

This analysis is for educational purposes only and should not be construed as financial advice. Trading and investing in the stock market involve risks, and individuals should conduct their research or consult with a financial advisor before making any investment decisions.

For those interested in furthering their knowledge of technical analysis, a Price Action Simplified course with three months of mentorship support is available starting from Jan 25, 2025. Limited seats are available, and interested individuals can find more information and join via the provided link