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

The positive sentiment continued for the second day initially and the Nifty tested the 16400 resistance. The MACD line crossed the signal line during the day and signalled a bullish bias.  

As the rally was news-driven, the volumes were very thin. Moreover, the bullish opening sentiment did not sustain in the afternoon session. The sudden sharp selling pressure forces the index to form a bearish shooting star candle. It closed below the opening level and indicated that Friday's rally is a bear market's countertrend move. The open interest also rose and gave the signal of fresh shorts built up. Only the metal index was in red at the opening, but at the end of the day, only IT and Auto indices were able to close in positive territory. Even the market breadth also turned negative in the afternoon session. As the Nifty formed another parallel high at 16400, it is better to wait to cross this to take the long positions.  

Mahindra & Mahindra

The stock closed near the prior pivot level and formed a strong bullish candle. The massive volume indicates buying interest and has a current 16-day cup pattern with a 7% depth. It is trading above the key moving averages and above the moving average ribbon. All moving averages are in an uptrend. The MACD is about to give a buy signal, while the RSI is in a strong bullish zone. The Elder Impulse system has formed a strong bullish bar and the TSI has given a fresh buy signal. The stock is also trading above the Anchored VWAP. In short, the stock is ready for a bullish pattern breakout. A move above Rs 943 is positive, and it can test Rs 990. Maintain a stop loss at Rs 918. Above Rs 990, continue with a trialling stop loss for a target of Rs 1023. 

Godrej Consumer Products 

The stock has formed a rectangular base and closed at crucial support. It is trading below the 20DMA for the last two days, and the moving average is in a downtrend. It just closed at 50DMA support and is trading below the moving average ribbon. The MACD has given a fresh sell signal. For the last two days, the volume has been high, showing the distribution. The RSI also broke the prior low support, while the TSI also gave a fresh sell signal, and the Elder Impulse system has formed two consecutive bearish candles. The stock closed below the TEMA, which worked as support earlier. In short, the stock closed at crucial support. A move below Rs 747 is negative, and it can test Rs 672. Maintain a stop loss at Rs 763.