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

The markets had a rude jerk with overnight incremental tensions between Russia and Ukraine, this lead to a very weak gap down opening in the markets. The opening of the markets was exactly at the 200-DMA, and through the rest of the day, the NIFTY spent the day pulling itself back from the lower levels. Although a lower top and lower bottom occurred on the charts, a strong white candle has appeared indicating that the markets closed much higher than they opened. The highest PUT OI accumulation indicates that the technical pullback may continue and the levels of 17000 may continue acting as support. A ranged day with positive bias is expected if we do not have any overnight negative cues to deal with.

M&M

Just like the other Auto stocks, M&M has been trading in a defined range; it has stayed rangebound and has relatively outperformed the markets by staying relatively resilient against the broader markets. Following the most recent price action, the stock has taken support at the 200-DMA, which presently stands at 821.92 and it has bounced off from there. A strong bullish engulfing candle has emerged; the occurrence of such candle near the support area lends credibility to the support. If the technical pullback continues, the stock may test 865 – 880 levels. Any close below 820 will negate this view.

HDFC

Among other financial stocks, HDFC is one of those stocks that has been relatively underperforming the broader markets. Few signals have emerged that hint at a formation of a likely reversal point. A bullish engulfing candle has emerged. This has emerged following a significant downtrend, and this may lead to a potential bottom formation. The stock has rolled inside the improving quadrant of the RRG, which further indicates a likely end to the period of relative underperformance for the stock. RSI has marked a new high and shows a bullish divergence against the price. The MACD has shown a positive crossover; it is bullish and above the signal line. If the trend reversal happens, the stock may test 2510 and 2540 levels. Any close below 2390 will negate this view.

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