Chart Busters: Top trading set-ups to watch for Thursday

The benchmark index recovered over 150 points from the important psychological level of 16000. The Nifty has formed a hammer candle at the bottom, which is a short-term bottom signal. In any case, if the Nifty forms a higher high and closes above the 16320 level; it would be a positive sign for the market.

On Wednesday, the index has taken the channel support. As the recovery from lower levels led to the formation of a long lower shadow candle, it shows that the buying support has come at the psychological level. But the index has formed a lower high and lower low candle, and we cannot assume that the bottom is in place unless and until it is confirmed by a sizable bullish candle formation. Banking and Financial services stocks primarily led the recovery, while the index and broader market breadths were negative. This gives some suspicion as there are very few stocks that managed to close positive. The Nifty once again failed to sustain opening gains.

The level of 15992 is likely to act as an important support for now. Nifty has to close above the prior high or above 17400 to continue its bullish momentum. At the same, it should have a follow-through day with higher volume.

GUJGAS: The stock has formed a bottom formation and closed above the moving average ribbon. The formation looks like a triple bottom. The massive volume indicates a positive fundamental change. The MACD line is very near to the zero line and the RSI is above the prior high and out of the squeeze, it formed higher lows. The +DMI is above the -DMI, whereas the directional movement indicator expands from an influx point. The TSI indicator has given a bullish signal and the stock is decisively above the Anchored VWAP resistance. In short, the stock is about to break out of a bullish pattern. A move above Rs 542 is positive, and it can test Rs 600. Maintain a stop loss at Rs 523.

LT: The stock has broken the key parallel support on a massive volume. It has declined below all key moving averages and the breakdown looks like a descending triangle. RSI fell below 30 and in a strong bearish zone. The MACD is below the zero line, and the histogram shows a strong bearish momentum, while the -DMI is above the +DMI, and ADX (27.5) shows a solid bear strength. The Elder Impulse system has formed a series of bearish bars. The stock is also below the TEMA and the TSI and KST indicators are in bearish mode. In short, the stock registered a bearish pattern breakdown. A move below Rs 1573 is negative, and it can test Rs 1512 in the very short term. Maintain a stop loss at Rs 1591.