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

After staying weak for the first half of the day following a renewed corrective move, the Indian equities staged a remarkable short covering led rally. The headline index ended the day with net gains of 150.30 points (+0.95%). In the process, a strong bullish engulfing candle has appeared on the charts. This has occurred after a significant prior downtrend; the occurrence of such a candle may lead to a formation of a potential reversal point. This will require confirmation and will also need the level of 15700 to stay protected. If the current technical pullback extends itself, it has room on the upside to test 16150-16200 levels.

WIPRO

Following a strong momentum move, WIPRO has finally broken out from a congestion zone that was formed between the 540-580 range. The most recent price move has taken the stock out of the range and has also marked this zone as a potential bottom for the stock. The OBV has marked a new high. While the MACD stays in a continuing buy mode, PSAR has shown a fresh buy signal. The RS line against the broader NIFTY500 is rising and it has crossed above its 50-DMA. The RSI has marked a new 14-period high which is bullish. If the move continues in the expected direction, the stock may test 615-620 levels. Any move below 570 will negate this view.

HDFC

Along with other financial stocks, HDFC has also grossly underperformed the broader markets. However, it has shown some signs of a formation of a potential base; this may cause some smart technical pullback to happen. A white candle with a long lower shadow emerged on the charts which looks very close to a hammer. This has occurred after a significant prior downtrend; a potential bottom may be in place looking at the large increase in the volumes at lower levels. RSI has just crossed above 30 from an overbought zone. In all possibilities, the technical pullback may continue, and this may cause the stock to test 2200-2240 levels. Any move below 2090 will negate this view.

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