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

The benchmark index, Nifty has resisted near 38.2% Fibonacci retracement level of its prior downward move (18210.15-17216.10). From the days' high, the index has lost 184.95 points. The price action has formed a bearish candle carrying a higher high and a higher low. The overall advance-decline was tilted in the favour of the advancers, also the India VIX has lost 5.11%.

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

Wendt (India) Ltd: On Wednesday, the stock has given an 82-days consolidation breakout on the daily chart along with robust volume. Since the last couple of trading sessions, the stock is outperforming the benchmark indices. Also, it relatively outshines Nifty 500 with a decent margin as relative strength comparison with Nifty 500 and Nifty 50 has reached to new heights. 

As the stock is trading at an all-time high, it is trading above its short and long-term moving averages on all the major timeframes. These averages are edging higher, which is a bullish zone. Daryl Guppy’s multiple moving averages is suggesting a bullish strength in the stock, plus it is meeting Mark Minervini’s trend setup criteria for investing. These two set-ups are suggesting bullish momentum in the stock.

The momentum indicators and oscillators are also supporting the overall bullish picture. Interestingly, the daily RSI has given a downward sloping trendline breakout on the daily chart, which is a bullish sign. Also, the daily MACD stays bullish as it is trading above its signal line and zero line.

However, from the days' high, the stock has witnessed minor correction as selling pressure emerged. Considering the robust technical structure of the stock we believe it is likely to continue its upward journey. On the downside, the 13-day EMA will act as strong support for the stock.

Carborundum Universal: Considering the daily chart, the stock has given consolidation breakout on the weekly chart and registered a fresh all-time high on Wednesday. Further, on breakout day the volume was expanded by nearly 7 times of 50-days average volume, which indicates important buying interest. The 50-days average volume was 3.14 lakh while on Wednesday the stock has registered a total volume of 20.68 lakh. In addition, the stock has formed a sizeable bullish candle.

Talking about indicators, the daily RSI has given inverted head and shoulders breakout on the daily chart, which is a bullish sign. The MACD line is above the signal line and zero line. The MACD histogram is suggesting a pickup in upside momentum. The ADX is reasonable at 23.45 on the daily chart. Moreover, the surge in +DI is suggesting that the trend will strengthen further.

These technical shreds of evidence indicate a strong upside in the coming months. On the downside, the 20-day SMA is likely to provide the cushion in case of any immediate decline. The 20-day SMA is currently placed at Rs 882.25 level.