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

The benchmark indices made an effort to recover after a series of sharp declines. But, was unsuccessful as the selling pressure reignited when the benchmark index reached above the previous day's high.

The Nifty made and higher high and higher low candle, but it had a long upper shadow candle. The index closed near its day's low, showing weakness present in the market. Initially, the broader market breadth was positive, but it became extremely negative by the end of the day. Even the index breadth is also negative. The RSI is at 32.59 and not showing any divergences currently.

The Nifty futures volumes are recording above average for the last five days, and the open interest is up by 6.23%, which is a sign of short built up. The metal index declined sharply and led the market to fall in the last hour. The broader market, Smallcaps in particular, is collapsing to the new lows. It has become very difficult to identify a stronger stock in the current market conditions. Hence, risk management is very important now.

HDFCLIFE: The stock closed below the 20DMA and formed a shooting star candle. It is trading above the 50DMA but moving average in a downtrend. The MACD has given a fresh sell signal, while the RSI declined below the 50 zone. The Elder Impulse system has formed two consecutive bearish bars, whereas the TSI and KST indicators also gave a fresh sell signal. Higher volume than previous days showing the selling pressure and distribution. In short, the stock is showing weaker signs. A move below Rs 558 is negative, and it can test Rs 544. Maintain a stop loss at Rs 565.

SRF: The stock broke the upward channel and parallel support with a massive volume. It is trading below the key moving averages. The RSI is in an oversold condition, but any bounce is likely to attract selling pressure. The MACD line is below the zero line and signals increased bearish momentum, while the Elder Impulse system has formed a series of bearish candles and the KST and TSI are already in bearish mode. The Mansfield relative strength shows poor strength in the stock. In short, the stock has registered a fresh breakdown. A move below Rs 2113 is negative, and it can test Rs 1962. Maintain a stop loss at Rs 2162.