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

The benchmark index, Nifty has lost 284.45 points or 1.65% on the first trading session of the week. The price action has formed a sizeable bearish candle carrying lower high-lower low. The index has again slipped below its 100-day EMA level. The leading indicator, 14-period daily RSI has given a bearish crossover. Currently, the daily RSI is quoting at 35.20, which is a bearish sign. The Nifty IT has lost nearly 3%. The overall advance-decline was tilted in the favour of the decliners. The Indian Volatility Index (VIX), a gauge for the market’s short-term expectation of volatility, surged by nearly 9% to end at the 20.08 level.

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

Morepen Laboratories: On Monday, the stock has given a 31-days consolidation breakout on the daily chart. This breakout was confirmed by robust volume. Along with this breakout, the stock has surged above its 100-day EMA level, which is a bullish sign.

The stock has formed a sizeable bullish candle on breakout day. The bullish candle formation has come along with a rise in the daily range. The last 10-days average is nearly 3 points whereas Monday’s range was almost 7.45 points.

The momentum indicators and oscillators are also suggesting bullish momentum. The leading indicator, 14-period daily RSI is currently quoting at 67.44 level. The daily RSI is trading above its 9-day average and it is in rising mode. The daily MACD line recently crossed the signal line, and the histogram became green. On the daily timeframe, ADX is 16.82 and suggests that the trend is yet to be developed. Directional indicators continue in the ‘buy’ mode as +DI continues above –DI.

Technically, all the factors are currently aligned in support of the bulls. Hence, we would advise the traders to be with a bullish bias. On the upside, the level of Rs 62.30 will act as minor resistance for the stock. The support is placed at Rs 51.50 level.

Vijaya Diagnostic Centre: The stock was listed on September 14, 2021, at Rs 540 and marked the high of Rs 672. It has formed a Doji candlestick pattern as of September 16, 2021, and witnessed a correction of over 20% from the high of Rs 672. Thereafter it has slid into the period of consolidation in a range of Rs 630-Rs 535.10 since the last 51 trading sessions.

Currently, the stock is on verge of giving a consolidation breakout on the daily chart. On the weekly chart, the stock has formed a double inside bar pattern. This is an indication of expansion in volatility. Currently, the stock is trading above its short-term moving averages, i.e. 20-day EMA and 50-day EMA levels. These moving averages are edging higher, which is a bullish sign.

Going ahead, in case the stock is sustained above the trendline resistance then we may see a sharp upside in the stock. The trendline resistance is placed in the zone of Rs 600-605 level. On the downside, the 20-day EMA will act as crucial support for the stock.