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

The benchmark index, Nifty has continued its northward journey for the fourth consecutive trading session. On Wednesday, the Nifty gained 156.60 points or 0.87%. The price action has formed a bullish candle with an upside gap. Interestingly, the Nifty index has closed above its swing high of 18210.15, which was registered on November 15, 2021. Going ahead, the level of 18342.05 will act as major resistance for the stock. The momentum indicators and oscillators are suggesting a continuation of the uptrend.

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

PNB Gilts: After registering the high of Rs 94.65, the stock has witnessed correction which is halted near the 61.8% Fibonacci retracement level of its prior upward move (Rs 46.50-Rs 94.65). The stock is oscillating in the range of Rs 72-60.50 for the last 20-weeks and formed a strong base near the support zone.

On Wednesday, the stock has given consolidation breakout along with robust volume. Also, the stock has formed a strong bullish candle on breakout day, which adds strength. The stock is trading above its short and long-term moving averages. These averages are in the desired sequence, which suggests the trend is strong.

Interestingly, on the daily chart, the leading indicator, 14-period daily RSI has taken support near the 60 mark and bounced sharply, which points to a super bullish range shift as per RSI range shift rules. The weekly RSI surged above the 60 mark for the first time after July 2021. The daily and weekly MACD stays bullish as it is trading above its zero line and signal line. The MACD histogram is suggesting a pickup in upside momentum. Moreover, Martin Pring’s long term KST set-up has also given a buy signal.

Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 78, followed by Rs 83 in the short term. While on the downside, the 20-day EMA will act as strong support for the stock.

Gujarat Alkalies & Chemicals: On Wednesday, the stock has given a breakout of Ascending Triangle pattern on the daily chart. This breakout was supported by a robust volume of nearly 7 times of 50-days average volume, indicating strong buying interest by market participants. The 50-days average volume was 3.20 lakh while on Wednesday the stock has registered a total volume of 21.11 lakh.

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 daily RSI surged above the 60 mark for the first time after 46 trading sessions. The fast stochastic is trading above its slow stochastic line. The daily MACD stays bullish as it is trading above its zero line and signal line. The +DI is just crossed above the -DI and ADX. And the ADX is above the -DI. This structure indicates the strengthening of the uptrend.

The technical evidence indicates a strong upside in the coming days. As per the measure rule of Ascending Triangle pattern, the upside target is placed at Rs 770, followed by Rs 820 level. 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 654 level.