Chart Busters: Top trading set-ups to watch for Friday

On a disastrous day of trade, the Indian markets inherited the weak global trade setup in the morning. It opened with a gap down, grew weaker as the day progressed, and ended with a very deep cut of 815.30 points (-4.78%). In the process, it has made a falling window pattern on the candles. Usually, such patterns result out of a gap down and resolve with the continuation of the downtrend. However, it would require confirmation; more so when the cause is external and there are shorts enough to cause a technical pullback. The NIFTY has a support in the zone of 16000-16200 and resistance now at 200-DMA which it has violated; this level stands at 16894.

TATA MOTORS

There was no stock or sector spared from Thursday’s carnage; this stock was no exception. However, overall, this has more resilience from a structural standpoint. TATAMOTORS went near its 200-DMA only to bounce back from there. On both daily and weekly charts, the stock still remains in a broadly defined range. The RSI has just crossed below 30; it is 29.84 and mildly oversold. There are possibilities of a technical pullback happening in this stock; if this resolves on expected lines, the stock may pull itself back up to 100-DMA levels which stand at 483. Any move below 405 on a closing basis will negate this view. The OBV stays in a sideways trajectory and did not decline much with the price decline.

SBIN

SBIN is another stock that was beaten down equally hard and is likely to show similar strength when it comes to the possibility of staging a technical pullback. PSU Banks were not spared either; in fact, no sector or stock was spared from the massive selling that took place on Thursday. However, when it comes to SBIN, despite a strong selloff the stock still remains in a wide trading range on both daily and weekly charts. PSU Banks were also showing resilience as compared to other sectors over the past few days. If a technical pullback occurs in the markets, this stock may participate well in it. In that case, the stock may test 490-505 levels. Any close below 460 will negate this view. RSI remains neutral against the price. OBV did not decline with the price; this is a good sign.