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

The benchmark index Nifty has continued its upward journey for the fourth consecutive trading session. On Wednesday, the index has gained 120 points and closed at 17925.25 level. The price action has formed a bullish candle carrying higher high and higher low which indicates a continuation of the uptrend. On the weekly chart, the 14-period RSI has given a bullish crossover and it has surged above the 60 mark, which is a bullish sign. The Bank Nifty has continued its outperformance on Wednesday also. It has gained over 2% and formed a sizeable bullish candle on the daily chart.

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

Hikal: The stock has formed a Dark Cloud Cover candlestick pattern as on the weekend of August 20, 2021, and thereafter witnessed correction. The correction is halted in between 38.2% to 50% Fibonacci retracement level of its prior upward move and it coincides with the 34-week EMA level. The stock has formed a strong base near the support zone, which was resulted in the formation of a symmetrical triangle pattern on the daily chart.

On Wednesday, the stock has given a breakout of a Symmetrical Triangle pattern on the daily chart. This breakout was confirmed by robust volume. Also, it has formed a sizeable 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 leading indicator, 14-period weekly RSI has given a bullish crossover and it is about to cross 60 mark. The fast stochastic is also trading above its slow stochastic line. Pring's KST has given a fresh buy signal on the weekly chart.

In a nutshell, the stock has registered a bullish pattern breakout along with volume confirmation. On the upside, the level of Rs 597, followed by Rs 628 will act as minor resistance for the stock. While on the downside, the 20-day EMA will act as strong support for the stock.

Chambal Fertilizers & Chemicals: On Wednesday, the stock has given a breakout of a Symmetrical Triangle pattern on the daily chart. This breakout was supported by nearly four times of 50-days average volume. Along with this breakout, the stock has closed above its upper Bollinger band level and started band walk, which is a bullish sign.

As the stock is trading near an all-time high, all the moving averages based on trade set-ups are showing a bullish strength in the stock. The stock is meeting Mark Minervini’s trend template and Daryl Guppy’s multiple moving averages rules. These two set-ups are giving a clear uptrend picture in the stock.

The momentum indicators and oscillators are also supporting the overall bullish chart structure. The 14-period daily RSI is currently quoting at 67.36 and it is trading above its 9-day average. Also, it has surged above its prior swing high. On the weekly chart, RSI is in bullish territory. The stochastic and Williams %R indicators are portraying a bullish picture for the stock.

As per the measure rule of the Symmetrical triangle pattern, the first target is placed at Rs 490, followed by Rs 550 in the medium-term. On the downside, the 20-day EMA will act as strong support for the stock.