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

On Tuesday, the benchmark index Nifty has opened with an upside gap and marked the high of 16936.40. The index has resisted near the 5-day EMA level and witnessed a fall of over 165 points from the day's high. The price action has formed a bearish candle with a long upper shadow, indicating selling pressure at higher levels. The Nifty Midcap 100 and Nifty Smallcap 100 has outperformed the benchmark indices. The overall advance-decline was tilted in the favour of the advancers. The fear index, India VIX has tumbled by 7.53%.

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

La Opala RG: Considering the daily chart, the stock has given a downward sloping trendline breakout as of December 03, 2021, and thereafter witnessed over 27% upside in just four trading sessions. After registering the high of Rs 450.90, the stock has witnessed a minor throwback. During the throwback phase, the volume activity was below the 50-days average volume, which suggests it is just a routine decline after a robust move. The throwback was halted near the 50% Fibonacci retracement level of its prior upward move (Rs 305.65-Rs 450.90) and it coincides with the 20-day EMA level.

On Tuesday, the stock has formed Morning Star like candlestick pattern on the daily chart and resumed its northward journey. Further, a reversal from the support zone is justified by above 50-days average volume. Also, the stock has formed a sizeable bullish candle on the daily chart.

The momentum indicators and oscillators are supporting the overall price structure. The leading indicator, 14-period daily RSI has given positive crossover and it is in rising mode. On the weekly chart, it is in the super bullish zone. The daily MACD stays bullish as it is trading above its zero line and signal line. The stochastic oscillator has also given positive crossover.

The technical evidence indicates a strong upside in the coming trading sessions. The prior 52-week high of Rs 450.90 will act as minor resistance for the stock. While on the downside, the 20-day EMA will act as strong support for the stock.

HCL Technologies: On Tuesday, the stock has given horizontal trendline breakout on the daily chart formed by connecting swing highs from October 2021. This breakout was supported by robust volume. Along with this trendline breakout, the stock has also surged above its 50-day EMA level. The 50-day EMA has started edging higher.

Its Mansfield Relative Strength (0.68) is above the zero line thereby, indicating the outperformance compared to the broader index i.e. Nifty 500. The stock's Relative Strength Index (RSI) has reached its highest value in the last 14-days, which is bullish. Also, it has managed to close above the 60 mark after a span of almost 47 trading sessions. On the weekly chart, the RSI has given a positive crossover. Moreover, Martin Pring’s long term KST set-up is about to give a buy signal on the weekly chart. On the daily timeframe, ADX is 6.17 which suggests that the trend is yet to be developed. Directional indicators continue in the ‘buy’ mode as +DI continues above –DI.

In a nutshell, the stock has registered a trendline breakout along with volume confirmation. On the upside, it can test the level of Rs 1234, followed by Rs 1267 in the short term. While on the downside, 50-day EMA will act as support for the stock, which is currently quoting at Rs 1168.50 level.