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

The Indian equity market witnessed another high volatile session on Monday as the benchmark indices registered yo-yo movements.

The Nifty opened with a negative gap and gradually recovered the early losses. But, last-minute profit booking made the index close in the negative zone. It tested the Thursday's low and formed a hammer kind of candle. On a 75-minutes chart, the index got the confirmation for a bearish implication for a hanging man doji. Though the Nifty closed with minimal losses, the breadth indicates deeper cuts are on the cards. The way small caps were declining is a worry for the market now. Even the Nifty breadth was negative. Interestingly, none of the sectors declined more than 1%. The beaten-down Metals outperformed on Monday, and the cement stocks continued to decline.

Technically, the Nifty is in a neutral zone and waiting for a confirmation for a directional move. As discussed earlier, the 16370-16700 zone will be crucial for a directional bias. Currently, the 50DMA is at 16857, which will be another key resistance.

ITC

The stock closed at the new high and formed a bullish engulfing candle. The TEMA has been acting as a support for the last ten days. It formed long lower shadow candles and indicated the buying interest is higher at the lower levels. The RSI gradually entered a strong bullish zone, while the MACD is also moving higher and as the stock is moving in a tight range, the momentum is low. The +DMI is above the -DMI, and ADX indicate a stronger strength. The stock is trading above the key moving averages. The KST and TSI indicators are in bullish mode and is above the Anchored VWAP resistance. In short, the stock closed at resistance or prior pivot level. A move above Rs 276.50 is positive, and it can test Rs 289. Maintain a stop loss at Rs 271.

HEROMOTOCO

The stock closed below the 20DMA decisively with a higher volume. It took support to move the average ribbon but declined below the 200DMA. The MACD has given a fresh sell signal in an overbought condition. The RSI declined below the 50 zone and the prior lows. The -DMi is moved above the +DMI and ADX from an influx point and indicates an impulsive downside move. The Elder Impulse System has formed two consecutive bearish bars. The stock is trading below the TEMA, while the TSI indicator has also given a fresh sell signal. In short, the stock is in reversal mode. A move below Rs 2540 is negative, and it can test Rs 2480. Maintain a stop loss at Rs 2558.