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

NIFTY’s move inflicts structural damage on charts.

NIFTY has averted a breakdown by bouncing off from an important pattern support trend line and the 200-DMA near which it had closed in the previous session. Moving past 16900-17000 levels was crucially important for the NIFTY; the deceleration of geopolitical tensions between Russia and Ukraine triggered a massive short-covering in the markets. NIFTY gave back all the previous session’s losses and ended with a strong gain of 509.65 points (3.03%). A strong white body has emerged on the candles; this not only reflects a directional consensus of the markets participants but also adds credibility to the pattern support. The markets are back inside the trading range again.

LUPIN

Following the recent sharp corrective move, LUPIN has got oversold on the daily chart. The stock has been underperforming the broader markets; the current technical structure hints at a likely technical pullback. The Bollinger bands have got much wider than normal; this increases the possibility of the stock returning to its normal trading range on reduced volatility. A hammer has emerged on the candles; this lays the ground for a potential near-term bottom formation subject to subsequent confirmation. RSI is below 30 and is oversold; it is on the verge of showing a bullish failure swing. If the current technical setup resolves on expected lines, the stock may see a technical pullback until 800-820 levels. Any slip below 740 will negate the view.

RELIANCE 

The stock has taken support on 200-DMA multiple times; 200-DMA currently stands at 2305. The stock has once again bounced back from this level validating the point as support once again. The PSAR shows a fresh buy signal. The stock has rolled inside the improving quadrant of the RRG; this hints at a potential end to the relative underperformance of the stock. The RS line against the broader NIFTY 500 Index has started to rise; it has moved above the 50-DMA. MACD shows a positive crossover; it is now bullish and above the signal line. The stock has the potential to test 2450-2520 levels. Any close below 2305 will negate this view.

Also read: Stocks to Buy Today: February 16 2022 - SBIN, INFOSYS, TITAN