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

As the Nifty is forming a descending broadening wedge-like formation, the zone of 16,800-17,000 is likely to act as very strong support for the market. Currently, the FIIs feel the Indian market is expensive. As per their investment picks and exits, the consumer discretionary and the IT sectors are expensive, and currently, they are focusing on industrials and capital goods sectors. Now that the NPA cycle is behind us, the banks and financial services sectors will benefit in the next leg of the bull market rally.

The current week is a monthly expiry and we expect volatility to make a strong comeback. The 50-DMA support is at 17129. There is a high probability of opening below the level, as the global ended sharply lower on Friday. Dow closed below the five-week low. Below the 17129, the next level of support is at 16893, and the previous low is at 16824, hence, the zone of 16,800-17,000 becomes very crucial. Meanwhile, a breach of this support zone would lead to a fall towards 16,600.

The daily and weekly RSI is below the 50 zone. The weekly MACD failed to get a bullish signal for the third week. The -DMI is above the +DMI, and the ADX is flattened on a daily chart, TSI and KST indicators were also given a sell signal. Elder impulse system has formed six bearish bar in the last seven days. Importantly, the Nifty closed below the Anchored VWAP support on Friday. There is little scope for a runaway rally in the coming days. It is better to approach a safe trading style with prudent risk management.

Here are the top trading set-ups to watch on Monday.

TORNTPHARM: The stock closed at the flat base support and broke the rising trend line support. It closed decisively below the 20DMA and 50DMA, with a higher volume than the previous day. The MACD has given a fresh sell signal. It has a very poor relative strength of just 17. The -DMI has moved above the +DMI. The Elder impulse system has given a fresh bearish signal and the stock has closed below the Anchored VWAP. The TSI and KST indicators also gave bearish signals. It has ended at the counter-trend rally by closing below the rising trendline support. A move below Rs 2721 is negative, and it can test Rs.2650. Maintain stoploss at Rs.3642. Below Rs.2650, continue with a trialling stop loss.

ICICIGI: The stock closed below the minor low and the 20DMA with a massive volume. It took support at the 50EMA and has also broken the 9-day base, with a high volume, which is negative. Importantly, it ended its counter-trend rally. The MACD has given a fresh sell signal, RSI closed below the prior low and long support line, while the Elder impulse system has formed a fresh bearish bar, and the TSI has given a fresh sell signal. The KST is about to give a fresh bearish signal. In short, the stock has reversed its counter-trend rally. A move below Rs 1318 is negative, and it can test Rs 1276. Maintain a stop loss at Rs 1327.