Chart-busters: Top trading set-ups to watch for Friday

The sharp recovery of 300 points from the day low needs follow-through for bullish confirmation. It could be a short-covering rally on an expiry day. The price behaviour on the Friday is important and weekly candle formation is also important. For reversal on the upside, it has to cross 20DMA first and then close decisively above the 16400. The MACD histogram shows a strong bullish momentum. There are several resistances above the 20DMA, and unless the May 6 gap is filled, the index will continue its consolidation. As the consolidation is already ten days, many frontline stocks HDFC twins are nearing the base breakouts.  

Let's watch for these frontline stocks' behaviour. If these heavyweights breakout from their bases, then avoid a short position in the index.  

HDFC 

The stock has broken out of a 25 day flat base with high volume. For the last three days, it has been trading above the 20DMA. The Bollinger bands contracted and started expanding. It closed at the 50DMA. The RSI came out of a squeeze and got the confirmation for bullish divergence and is also near the strong bullish zone. The Elder impulse system has formed a series of bullish bars in the base. The KST and TSI indicator has given fresh bullish signal. In short, the stock is broke base. A move above Rs 2284 is positive, and it can test Rs 2305 and Rs 2425. Maintain a stop loss at Rs 2245. 

HDFC AMC 

The stock is trading in a very tight range for the last five days. It has closed above the sloping trend line the volume is higher than the previous day. The RSI has broken out of a squeeze and is above the oversold zone. There is positive divergence confirmation for a bullish move. The MACD line is about to close above the signal line for a bullish signal. The Elder impulse system has formed all the neutral bars in this tight range and the TSI and KST indicators are also about to give a buy signal. In short, the stock is giving a contra trade opportunity with a good risk-reward ratio. Buy this stock only above Rs 1754 with a stop loss of Rs1690. The target is placed at Rs1876.