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Lifting the hood on Dr. Reddy’s Laboratories (RDY)

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Quite a few emergingmoney.com readers have been asking about Dr. Reddy's Laboratories ( RDY , quote ), the only pure play on Indian pharma that most U.S. retail investors can add to their own portfolios.

Quick rundown on technicals: RDY has been in a downturn since hitting its 53 week high of $39.37 on April 29, hitting a 52-week low on October 4.

At that point the price action reversed, only to retest the low again. Since then, RDY has consolidated into a wedge pattern: progressively lower volume, narrowing price action and the fuel gauge (blue dotted line) is also compressing -- but with a basis pointing higher.

The 150-day moving average has been acting a strong support during RDY's downward movement.

Looking at the downward Fibonacci wave with A at $36.37 and B at $30.51 with a 0.618% C pullback, the Fibonacci wave is suggesting a price target -1.618% or $28.69, creating a new 52-week low.

A few possible scenarios:

A. RDY's price action is consolidating and should eventually make a move either to the upside or downside. The Fibonacci's suggests to the downside while the fuel gauge is hinting higher. If the low is broken, the next price support level is around $27.40.

B. Since the Fibonacci target extension is also near the next price support level, RDY could reverse, break out of the newly formed AB swing and test the 150-day moving average to the upside.

Summary: Traders may want to consider waiting to see what transpires both on the technical front the fundamental front and look for catalyst that can drive price.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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