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

On Monday, the benchmark index Nifty has marked the low of 17836.10 and thereafter recovered nearly 250 points. The index settled above the 18000 mark. The price action has formed a bullish candle with a long lower shadow. The long lower shadow indicates buying interest at lower levels. The leading indicator, 14-period daily RSI has given a positive crossover, which is a bullish sign.

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

J.K. Cement: Majorly, the stock is displaying a bullish trend as it is marking the sequence of higher tops and higher bottoms. Further, it is trading above its short and long-term moving averages. These averages are in ascending order, which suggests the trend is strong.

On Monday, the stock has given downward sloping trendline breakout on the daily chart. This breakout is confirmed by robust volume. Additionally, the stock has formed a sizeable bullish candle on breakout day, which adds strength to the breakout. The momentum indicators and oscillators are also suggesting bullish momentum. The leading indicator, 14-period daily RSI has also given a downward sloping trendline breakout, which is a bullish sign.

On the daily timeframe, ADX is quoting at 16.41 which suggests that the trend is yet to be developed. Directional indicators continue in the ‘buy’ mode as +DI continues above –DI. Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 3930 followed by Rs 4000 in the short term.

Muthoot Finance: The stock is oscillating in the range of Rs 1638.85- Rs 1402.40 for the last 63 trading sessions. On Monday, the stock has given a 63-days consolidation breakout on the daily chart. Further, on breakout day the volume was expanded by nearly 8 times of 50-days average volume, which indicates important buying interest. The 50-days average volume was 9.02 lakh while on Monday the stock has registered a total volume of 71.64 lakh.

Currently, the stock is trading above its short and long-term moving averages. These averages are in a rising trajectory. Interestingly, the daily RSI is oscillating in a sideways range, i.e. 40-60 zone since the last 52 trading sessions. On Monday, RSI has given consolidation breakout and surged above the 60 mark. The RSI is trading above its 9-day average and both are in a rising trajectory. The fast stochastic is trading above its slow stochastic.

Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 1770 followed by Rs 1850 in the short term.