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

On Tuesday, the benchmark index Nifty opened with a downside gap. After registering the low of 16836.80, the index marked the sequence of higher tops and higher bottoms on a lower timeframe. At the closing bell, the index has ended at 17277.95 with a gain of 0.75% or 128.85 points. The price action has formed a bullish candle with a lower shadow. On the daily chart, the stochastic has given bullish crossover, which suggests limited downside. The Nifty PSU Bank has outperformed the frontline indices, while the overall Advance/Decline ratio is tilted in favour of bulls.

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

Maruti Suzuki India: On Tuesday, the stock has given a breakout of a horizontal trendline resistance on the daily chart. This breakout was confirmed by robust volume. Also, it has formed a sizeable bullish candle on breakout day, which adds strength to the breakout.

Currently, the stock is trading above its short and long-term moving averages. These averages are in the desired sequence, which suggests the trend is strong. The leading indicator, 14-period daily RSI has given a bullish crossover. The RSI is in a bullish trajectory and it is in rising mode. The daily and weekly MACD stays bullish as it is trading above its zero line and signal line. The fast stochastic is also trading below its slow stochastic line. The trend strength indicator, Average Directional Index (ADX), is at 30.45, which indicates strength. The +DI is much above the -DI. This structure is indicative of the bullish strength in the stock.

The technical evidence indicates a strong upside in the coming days. On the upside, the level of Rs 8845 will act as minor resistance for the stock. While on the downside, the 20-day EMA will act as strong support.

Shivalik Bimetal Controls: Since the last 47 trading sessions, the stock is trading in a rising channel. On Tuesday, the stock has bounced exactly from the edge of the lower trendline of the rising channel (logarithmic scale). The rising trendline support was confluence with the 50-day EMA level. Further, on Tuesday, the stock has surged above its 20-day EMA level.

The momentum indicators and oscillators are also supporting the overall bullish price structure. The 14-period RSI has bounced after touching the 48-50 zone and at present, its reading is 54.82. The RSI is about to give bullish crossover and it is in rising mode, which indicates further bullish momentum. The daily MACD stays bullish as it is trading above its zero line and signal line.

Considering the above factors, we expect the stock to continue its upward journey and touch the upper trendline of the rising channel. The upper trendline (supply line) of the rising channel is currently placed at Rs 495 level. On the downside, the 50-day EMA will act as strong support for the stock, which is currently placed at Rs 380 level.