Chart Busters: Top trading set-ups to watch out for Tuesday
The benchmark index Nifty opened with an upside gap and thereafter rapidly gave up its opening gain and lost nearly 273 points from the day's high. However, the index has taken support near the 20-day EMA level and recovered almost 167 points. The index has ended at a 18135.85 level with a gain of 10.50 points. The price has action has formed bearish candle with long lower shadow. The major contribution was seen from banking stocks. The banking benchmark index Bank Nifty has gained over 2%.
Here are the top trading set-ups to watch out for Tuesday.
Gland Pharma: After registering the high of Rs 4350, the stock has witnessed correction. The correction is halted near the 38.2% Fibonacci retracement level of its prior upward move (Rs 1700-Rs 4350) level. In the last three trading sessions, the stock has outperformed the benchmark indices and formed bullish candles. On Thursday, the stock has formed a spinning bottom candlestick pattern followed by a bullish candle and on Monday, the stock has formed a hammer candlestick pattern. Interestingly, on the weekly chart also the stock has formed a hammer candlestick pattern. The long lower shadow of the candle indicates the emergence of buying interest near trendline support. Further, on Monday, the volume spurt was seen in stock, which indicates that it is accumulated by smart investors at a lower level.
The momentum indicators and oscillators are also supporting the overall bullish chart structure. The leading indicator, 14-period daily RSI is currently quoting at 45.83 level. The daily RSI has given positive crossover and it is in rising mode. The fast stochastic is also trading above its slow stochastic line.
Going ahead, in case the stock sustains above its 20-day EMA on a closing basis, it can give some positive momentum going forward. On the downside, today's low of Rs 3312.15 will act as strong support for the stock.
Home First Finance Company India: After registering the high of Rs 691.80, the stock has witnessed minor correction along with low volume. The correction is halted near the 61.8% Fibonacci retracement level of its prior upward move (Rs 535.30-Rs 691.80). On Monday, the stock has formed a bullish candle with a long lower shadow, which indicates buying interest near the support zone. Since the last two trading sessions, the volumes recorded were above the 50-days average, which is a sign of accumulation.
Currently, the stock is trading above its short and long-term moving averages. These averages are in the rising mode, which is a bullish sign. The leading indicator, 14-period daily RSI has given positive crossover and it is in rising mode. The daily stochastic has also given positive crossover. The daily MACD stays bullish as it is trading above its zero line and signal line.
Considering the robust technical structure of the stock we believe it is likely to touch new highs and hence one can accumulate this stock. On the downside, the 20-day EMA is likely to act as strong support for the stock, which is currently quoting at Rs 625 level.
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