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

On Tuesday, the Nifty index had opened with an upside gap and thereafter marked the high of 17251.65 level. The index has gained over 260 points or 1.56%. The price action has formed a bullish candle with wicks on either side which indicates that the dips were bought and at higher levels, and profit booking was witnessed. The Nifty Midcap and Smallcap has gained 1.40% and 1.09% respectively. The overall advance-decline was tilted in the favour of the advancers. The India VIX has tumbled over 8%.

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

Emami Realty: After registering the high of Rs 88.40, the stock has witnessed correction. The correction is halted near the 200-day EMA level. Historically, the stock has taken support near 200-day EMA many times.

On Tuesday, the stock has given a breakout of a downward sloping trendline resistance on the daily chart. This breakout was confirmed by robust volume. 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 has also given a downward sloping trendline breakout, which indicates further upside momentum. The daily RSI is currently quoting at 66.91 and it is in rising mode. The MACD line just crossed the signal line, and the histogram became green.

The technical evidence indicates a strong upside in the coming days. On the upside, the prior swing high of Rs 88.40 will act as resistance for the stock. While on the downside, 8-day EMA will act as support for the stock, which is currently placed at Rs 70.75 level.

Torrent Pharmaceuticals: After registering the high of Rs 3248.80, the stock has witnessed throwback along with relatively lower volume. The throwback is halted near the 61.8% Fibonacci retracement level of its prior upward move (Rs 2735.30-Rs 3248.80) and it coincides with the 20-day EMA level.

On Tuesday, the stock has taken support and bounced sharply. Further, the stock has formed a sizeable bullish candle. In addition, the reversal from the support zone is supported by above 50-days average volume. Besides, the stock has surged above its short-term 8-day EMA and 13-day EMA.

The leading indicator, 14-period daily RSI has surged above the 60 mark and it is in rising mode. The daily MACD stays bullish as it is trading above its zero line and signal line. The stochastic has given bullish crossover on the daily chart. The trend strength indicator, Average Directional Index (ADX), is at 26.97, which indicates strength. The +DI is much above the -DI. This structure is indicative of the bullish strength in the stock.

Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 3248.80 in the short term. On the downside, the 20-day EMA will act as support for the stock.