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

NIFTY was again subjected to a gap down; the pullback that happened in the middle of the session did not sustain and the headline index ended up ending with a net loss of 382.20 points (-2.35%). In the process, it has formed a Doji on the candle. The more important formation was that of a falling window. Such patterns arise out of a gap down and usually resolve in the direction of the trend. However, in the present case, the markets are close to being oversold, and looking at the shorts that exist in the system, a technical pullback may be around the corner. In any case, candle formations always need confirmation and must not be traded in isolation. Going ahead, it would be crucial for the NIFTY to defend Monday’s low of 15711 levels.

BALKRISIND

Following strong corrective moves over the past many days, the stock had slipped in the oversold territory. It has formed multiple signs that hint at a potential technical pullback with a bottom in place. A large bullish engulfing candle has emerged. The occurrence of such a candle after a significant decline is a sign of a potential reversal point. While this happened there was a surge in volumes and they were above their 25-day average. The stock is about to roll inside the improving quadrant of the RRG when benchmarked against the broader NIFTY500 index. The RSI has crossed above 30 from an overbought zone; it has also shown a formation of a bullish failure swing. If the current pattern resolves on the expected lines, the stock may test 1865 -1920 levels. Any close below 1775 will negate this view. 

GSFC 

Over the past several weeks, the stock has been in a broad trading range between 116-135 levels. Presently, following some consolidation, the stock has managed to move above all its key moving averages. Apart from this, while no breakout has yet occurred, the On-Balance-Volume has marked a new high. OBV testing a new high before the actual price breakout is a positive sign. Further, RS line against the broader NIFTY 500 index has also formed a new high. The daily MACD has shown a positive crossover; it is now bullish and above the signal line. The RSI is neutral and does not show any divergence against the price. The stock is on the verge of rolling inside the leading quadrant of the RRG. If the moves happen on the expected lines, the stock may test 135-142 levels. Any close below 122 will negate this view.