Chart Busters: Top trading set-ups to watch for Monday
On a volatile and disappointing day of the trade, the markets continued with their uncertain bearish undertone and ended with a net loss of 252.70 points or -1.53%. The NIFTY saw a gap down opening and grew weaker as the day progressed. However, in the middle of the session, the markets saw very strong 300+points of recovery from their low point. However, this did not sustain and got sold as well. The NIFTY has formed a lower top and lower bottom on the bar charts. It shows a strong bullish divergence of the RSI against the price. Today the bearish undertone will persist so long as NIFTY is below 16420 level which is the double bottom support that the NIFTY has violated.
IT in general is relatively outperforming the broader markets. WIPRO has tried to break out of a congestion zone that it had formed after testing the low of 537 at the end of January. Since then, the stock was trapped in a narrow congestion zone; the most recent price action shows that the stock has attempted to move out of this zone. The RSI has marked a fresh 14-period high which is bullish. MACD stays in continuing buy mode. While the volumes are above their 25-day average, the stock remains in the leading quadrant of the RRG. If the up move happens on the expected lines, the stock may test 595-610 levels. A close below 550 will negate this view.
After correcting from the 720-725 zone, the stock tested the low point near 460 in November 2021. Since then, it has been trapped in a defined but broad trading range of 460-530 levels. Few signals have emerged on the charts that hint towards a likely upward revision of price over the coming days. The price action has seen a formation of a complex bullish inverted Head and Shoulders pattern; it has a neckline near 570. The 200-DMA which presently stands at 577 is acting as a proxy trend line for this formation. The PSAR has shown a fresh buy signal; OBV is at its high point. The RS line against the broader NIFTY 500 index is in an uptrend and above the 50-DMA. If the present pattern is resolved on the expected lines, the stock may test 570-600 levels. A close below 510 will negate this view.
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