Chart Busters: Top trading set-ups to watch for Tuesday
On a strong trending day, the Indian equities opened on a better and more resilient note. They traded in a capped range in the first half of the session and grew stronger in the second half to end the day with a strong gain of 240.85 points (+1.45%). It is recommended not to chase any further moves on the upside as the NIFTY will be near the resistance zone of 16900-16965 levels. The 200-DMA is still a bit away and is all likely to act as a strong resistance point on a closing basis.
ICICIBANK, along with all other financial and banking stocks is relatively underperforming the broader market. It failed to clear a double top resistance between 835-845 area; the subsequent corrective move took the stock below all the three key moving averages. The most recent move has come with a strong bullish divergence against the price. While the price made a lower low, the RSI did not. This resulted in a bullish divergence of the RSI. The daily MACD is on the verge of a positive crossover as seen from a sharply narrowing of the Histogram. The increase in volumes in the last phase of the corrective move hints at a potential formation of a base.
The stock may extend its up move to its 200-DMA which is presently at 721 and then subsequently to 740. Any close below 670 will negate this view.
Following a corrective decline from 5400 till 3800, the stock remained in a falling channel. However, over the past several weeks, it attempted to form a base for itself; presently it has put together some signs that hint at a potential reversal of the trend. The stock shows a fresh PSAR buy signal. The daily MACD stays in continuing buy mode. The RSI has marked a new 14-period high which is bullish. The RSI also shows a strong bullish divergence against the price. The stock has moved inside the leading quadrant of the Relative Rotation Graph; it is slated to relatively outperform the broader markets. The RS line against NIFTY500 Index has changed its trajectory; it is inching higher and remains above the 50-DMA.
The stock may test 4487-4650 levels over the coming days. Any close below 4300 will negate this view.
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