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

On the weekly options expiry day, NIFTY continued to drift lower but remained largely within a range as indicated by the options data. The strikes of 16500 continued to hold maximum PUT OI; this ensured that the NIFTY defends this level. In the process, a bearish engulfing candle has appeared on the chart. Since this candle has emerged following a downtrend and near pattern support, it may mark a temporary reversal point for the markets subject to the required confirmation on the charts. NIFTY has managed to keep its head above the 16400 level which is double bottom support; it would be crucial for the markets to stay above this point to avoid any incremental weakness.

BAJAJFINSV

The financial universe has been relatively underperforming the broader markets; however, BAJAJFINSV has been showing a lot of resilience as compared to its peers. The stock has been avoiding any major decline; it appears to be in a congestion area formed between the 50-, and the 200-DMA which are presently at 16512 ad 15580 respectively. While this pattern is formed, these two moving averages are acting as a proxy trend line to the formation. While the stock has taken multiple support at the 200-DMA, it has shown signs of a likely technical pullback and resumption of the up move. While the RSI stays neutral, the MACD has shown a positive crossover. A fresh PSAR buy signal is also seen on the charts. If the present pattern gets resolved with an up move in price, the stock may test 16500, 16785 levels over the coming days. Any move below 15210 will negate this view.

COFORGE

Along with other defensive plays, the mid-cap IT too has been showing a lot of resilience amid this volatile market. COFORGE has formed a potential reversal point for itself following a corrective move. The stock is inside the improving quadrant of the RRG when benchmarked against the broader NIFTY 500 index. This is likely to ensure that the stock continues to improve its relative performance against the broader markets. The RS line against NIFTY500 has changed its trajectory and it is rising higher. The RSI has marked a new 14-period which is bullish. It also shows a bullish divergence against the price. OBV stays near its high point acting as a confirmation on the volume front. If the technical pullback continues, the stock may test 4860 – 4930 levels over the coming days. Any close below 4580 will negate this move.