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

On Tuesday, the benchmark index Nifty has witnessed pullback rally of over 260 points. The index has gained 0.39% on Tuesday. The price action has formed bullish candle with carrying a lower low and a lower high. The Nifty Midcap 100 and Nifty Smallcap 100 as outperformed benchmark indices. The overall advance-decline was tilted in the favour of the advancers.

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

Elgi Equipments: On Tuesday, the stock has given horizontal trendline breakout on daily chart. This breakout was supported by robust volume of more than six times of 50-days average volume. This indicates strong buying interest by market participants. The 50-days average volume was 3.39 lakh while on Tuesday the stock has registered a total volume of 22.03 lakh. Additionally, the stock has formed sizeable bullish candle on breakout day, which adds strength to the breakout.

Currently, the stock is trading above its short and long-term moving averages. These averages are in desired sequence, which suggests trend is strong. The leading indicator, 14-period daily RSI is currently quoting at 71.27 and it is in rising mode. The trend strength is absolutely extremely high as the ADX is above 35 and -DI is much below the +DI and ADX. The daily MACD stays bullish as it is trading above its zero line and signal line. The MACD histogram is suggesting pickup in upside momentum.

In a nutshell, the stock has registered a bullish pattern breakout along with volume confirmation. On the upside, the prior swing high of Rs 243 will act as minor resistance for stock. While on the downside, the 20-day EMA will act as strong support for the stock.

Mirza International: On November 04, 2021, the stock has given downward sloping trendline resistance breakout on daily chart and thereafter witnessed nearly 36% upside in just 7 trading sessions. After registering the high of Rs 94.40, the stock has witnessed minor throwback. During this throwback phase, the volume was not significant, which suggests its routine decline after a robust move.

On Tuesday, the stock has taken support near its 20-day EMA and recovered almost 12.61% from the days low. The price action has formed sizeable bullish candle along with relatively higher volume. Currently, the stock is comfortably placed above its key moving averages i.e. over 32% and 56% from 50-DMA & 200-DMA.

Interestingly, in the recent throwback phase, the leading indicator RSI has taken support near the 59-60 zone, which suggest super bullish range shift as per RSI range shift rules. The daily RSI is on verge of giving bullish crossover. The MACD is above the zero line and signal line. The MACD histogram suggests a bullish momentum. And most importantly, the MACD line crossed the prior swing highs.

Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 94.40 followed by Rs 108.20 in the medium term. On the downside, the Tuesday’s low of Rs 78.10 will act as support for the short-term.