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

A strong closing of the US markets on Friday had almost set a stage of extension of the up move seen in the Indian markets as well. However, instead of a gap-up opening, the markets opened on a negative note. This weakness was inflicted after Russia put its nuclear weapons deterrence on a high alert.

However, after opening on a lower note, the NIFTY staged an over 400-points recovery and ended with a net gain of 135.50 points or 0.81%. A bullish engulfing candle has been formed; it would be crucial to see if the NIFTY can test and attempt to move past the 200-DMA. In any case, we will see the global markets and NIFTY as well reacting to the outcome of the talks between Russia and Ukraine.

TATA STEEL

TATASTEEL has been trapped in a sideways trading range. It has formed a rectangle pattern with a trading range between 1040-1220 levels. While this stock has relatively underperformed its peers, some upward revision of the price is expected over the coming days. The stock is just below the 200-DMA which presently stands at 1237.95. Any move above this will propel strength in the stock. The OBV has already reached a high point before the actual price breakout from this rectangle pattern. This acts as a confirmation of the volumes. The RS line against the broader NIFTY500 index is rising and above the 50-DMA. MACD is on the verge of a positive crossover.

If the move happens on the expected lines, the stock may test 1245 and 1290 levels. Any close below 1170 will negate this view.

BEL

On the expected lines, the PSE stocks are seeing relative outperformance against the broader markets. BEL too has largely underperformed the NIFTY500 Index; however, few signs have emerged that hint at a possible start of some fresh move on this stock. PSAR has shown a fresh buy signal. Daily MACD has shown a positive crossover and is now above the signal line. The RS line against the broader markets has formed a new high; it is above the 50 DMA. The stock is inside the leading quadrant of the RRG when benchmarked against the broader NIFTY 500 Index. 

If the present technical structure resolves on the expected lines, we can see the stock testing 218 and 225 levels. Any close below 198 will negate this view.