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

The benchmark index Nifty has continued its northward journey for the second consecutive day. The index has gained nearly 300 points or 1.71%. The price action has formed a sizeable bullish candle, and most importantly, the index has surged above its 20-day EMA. The short-term 8-day EMA and 13-day EMA has started edging higher, which is a bullish sign. The daily stochastic has given positive crossover. Going ahead, the zone of 17480-17500 will act as crucial resistance for the index. In case Nifty clears these resistances, it will gain bullish strength.
 

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

Trejhara Solutions: Considering the daily chart, the stock has given a downward sloping trendline breakout on November 25, 2021, and thereafter witnessed a 40% upside in just four trading sessions. After registering the high of Rs 92.80, the stock has witnessed minor throwback. During the throwback phase, the volume activity was relatively lower, which suggest it is just a routine decline after a robust move. The throwback was halted near the 38.2% Fibonacci retracement level of its prior upward move (Rs 51.15-Rs 92.80) and it coincides with the 8-day EMA level.

On Wednesday, the stock has given five days consolidation breakout along with robust volume. Also, it has formed a sizeable bullish candle on the daily chart. All the moving averages based on trade set-ups are showing a bullish strength in the stock. Daryl Guppy’s multiple moving averages is suggesting a bullish strength in the stock. The stock is trading above all the 12 short and long term moving averages. The averages are all trending up, and they are in a sequence.

The momentum indicators and oscillators are also supporting the overall bullish price structure. Hence, we would advise the traders to be with a bullish bias. On the downside, 8-day EMA will act as strong support for the stock.

Aurobindo Pharma: On Wednesday, the stock has given a breakout of a downward sloping trendline on the daily chart. This was confirmed by above 50-days average volume. Along with this breakout, the stock has surged above its 50-day EMA level for the first time after 92 trading sessions. The falling slope of 50-day EMA has slowed down considerably and the 20-day EMA has started edging higher. This is a bullish sign.

The stock's Relative Strength Index (RSI) has reached its highest value in the last 14-days, which is bullish. Also, it has surged above its prior swing high. The fast stochastic is trading above its slow stochastic line on both weekly daily charts. The MACD line just crossed the signal line, and the histogram became green. Moreover, a positive divergence was also spotted at the daily and weekly time frame on the RSI, which indicates a limited downside. Positive divergence occurs when the price is making a lower low, while the RSI forms a higher low.

Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 737 followed by Rs 750 in the short term. On the downside, the 20-day EMA is likely to provide the cushion in case of any immediate decline. The 20-day EMA is currently placed at Rs 674.40 level.