Chart Busters: Top trading set-ups to watch out for Monday

On Friday, the benchmark index Nifty opened with an upside gap and marked the high of 17373.50 level. Thereafter, the index has witnessed a correction of nearly 271.55 points from the day high and ended the day near the day's low. The price action has formed a shooting star like candlestick pattern. This is not a perfect textbook pattern as it is not formed in a strong uptrend. However, the long upper shadow of the candle is indicating selling pressure near the day's high. The Nifty Midcap 100 and Nifty Smallcap 100 has outperformed the frontline indices on Friday.

Here are the top trading set-ups to watch out for Monday  

Orient Bell: The stock has formed a shooting star candlestick pattern as on the weekend of July 30, 2021, and thereafter witnessed correction along with low volume. The correction is halted near the 61.8% Fibonacci retracement level of its prior upward move (Rs 203-Rs 429.20) and it coincides with the 20-week EMA level.

After registering the low of Rs 284, the stock has started marking higher tops and higher bottoms. On Friday, the stock has surged above its prior all-time high and registered a fresh all-time high. On the weekly chart, the stock has formed a sizeable bullish candle along with above 50-week average volume, which is a bullish sign.

As the stock is trading at an all-time high level it is trading above its short and long-term moving averages. These averages are in the desired sequence, which suggests the trend is strong. The stock's Relative Strength Index (RSI) has reached its highest value in the last 14-weeks, which is bullish. Also, it has managed to close above its prior swing high. The fast stochastic is trading above its slow stochastic line on the weekly chart. The momentum indicator weekly MACD line has crossed above the signal line, which resulted in the histogram turning positive.

The technical evidence indicates a strong upside in the coming weeks. On the downside, 8-day EMA will act as strong support for the stock.
 

Mangalore Chemicals & Fertilizers: After registering the low of Rs 61.50, the stock has witnessed a 35.44% upside in just 21 trading sessions. On January 18, 2022, the stock has formed a bullish engulfing candlestick pattern and thereafter witnessed minor correction along with low volume. The correction is halted in between 38.2% to 50% Fibonacci retracement level of its prior upward move and it coincides with the 34-day EMA level.

The stock has formed a strong base near the support zone and resumed its upward journey. On Friday, the stock has gained over 6% and it has formed a sizeable bullish candle along with robust volume. The stock is trading above its short and long-term moving averages. The 20-day EMA and 50-day EMA has started edging higher. The leading indicator, 14-period daily RSI has given a positive crossover and it is in a bullish trajectory. The daily stochastic has also given positive crossover.

Considering the all above factors, the stock is likely to continue its northward journey. On the upside, the prior swing high of Rs 83.30 will act as minor resistance for the stock. While on the downside, the 34-day EMA will act as crucial support for the stock.