Chart Busters: Top trading set-ups to watch out for Tuesday
On Monday, the benchmark index Nifty opened with a downside gap. After registering the low of 16833.20, the index has recovered over 250 points and closed at 17086.25 with a gain of 0.50%. The price action has formed a bullish candle with a lower shadow. Going ahead, the zone of 17160-17180 is likely to act as strong resistance for the index as it is the confluence of 61.8% Fibonacci retracement level of its prior downward move and 20-day EMA level. While on the downside, the level of 16833 will act as a minor support for the index.
Here are the top trading set-ups to watch out for Tuesday.
Apollo Micro Systems: Considering the weekly chart, the stock is oscillating in the range of Rs 132.30-98.70 for the last 33-weeks. On Monday, the stock has given consolidation breakout on the daily chart. This breakout was supported by a robust volume of over 13 times of 50-days average volume. This indicates strong buying interest by market participants. The 50-days average volume was 2.09 lakh while on Friday the stock has registered a total volume of 28.15 lakh. Also, the stock has formed a sizeable bullish candle on breakout day.
Currently, the stock is trading above its short and long-term moving averages. These moving averages are edging higher. The stock's Relative Strength Index (RSI) has reached its highest value in the last 14-days, which is bullish. Also, it has managed to close above its prior swing high. The weekly RSI has also surged above its prior swing high. The ADX is reasonably good at 22.23 levels. The +DI is above the -DI and ADX shows strength in the trend.
Technically, all the factors are currently aligned in support of the bulls. Hence, we would advise the traders to be with a bullish bias. On the downside, the 8-day EMA will act as strong support for the stock, which is currently placed at the Rs 123.95 level.
Jindal Stainless (Hisar): After registering the high of Rs 358.80, the stock has witnessed minor correction along with below-average volume. The correction is halted near the 61.8% Fibonacci retracement level of its prior upward move and it coincides with the 100-day EMA level. During this phase, the stock has oscillated in the range of Rs 341-283.05, which resulted in the formation of Ascending Triangle pattern on the daily chart.
On Monday, the stock has given a breakout of Ascending Triangle pattern along with robust volume. Further, it has formed a strong bullish candle on breakout day, which adds strength to the breakout. Interestingly, the stock meets the criteria of the Bowtie pattern by Dave Landry. This pattern occurs when all the three moving averages intersect and spread out, shifting from proper downtrend to proper uptrend, in order of 10-SMA is greater than 20-EMA and 20-EMA is greater than 30-EMA.
The momentum indicators and oscillators are also suggesting bullish momentum. The daily RSI has surged above the 60 mark for the first time after 33 trading sessions. The fast stochastic is above the slow stochastic line. Moreover, the daily MACD stays bullish as it is quoting above its zero line and signal line.
In a nutshell, the stock has registered a bullish pattern breakout along with volume confirmation. As per the measure rule of Ascending Triangle pattern, the upside target is placed at Rs 382, followed by Rs 400 in the short term. While on the downside, the 20-day EMA will act as strong support for the stock.
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