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

The Nifty has rallied ferociously after formation of parallel bottoms and Doji candle. The southern doji candle got a bullish confirmation with Tuesday’s massive move. It formed one of the biggest bullish candles after February.

The Nifty has touched a 23.6 per cent retracement of the current downswing. A close above the 16297 will fuel a further rally towards 16645. As this is a counter-trend rally, we cannot expect a retracement of more than 38- 50 per cent of the prior swing. The Doji bullish confirmation will have a positive impact in the next 3 - 5 days. The RSI gave a clue yesterday with a sharp rise above the 30 zone. As long as the level of 15739 is protected, we can classify the market status as a rally attempt. After this big move, it requires a follow-through day to continue the counter-trend rally. In any case, if the Nifty forms an inside bar on Wednesday, then we need to doubt Tuesday’s rally. On a 75 minutes chart, the Nifty has broken out of a double bottom pattern. It also closed above the moving average ribbon along with the MACD line above the zero line. The strong bullish move is likely to have a testing resistance at the May 06 gap area. The gap resistance is also at the 38.2 per cent level.

M&M: The stock closed decisively above the 20DMA and broke out of counter-trend consolidation. The 50 DMA crossed 200DMA; a Golden Crossover is a long-term bullish signal. The Histogram suggests a decline in the bearish momentum. RSI closed above the 60 and entered the strong bullish zone. The directional movement indicators are at an influx point and a rise in +DMI will result in an impulse move. The Elder impulse system has formed two consecutive bullish bars. The MACD and TSI are about to give a bullish signal. In short, the stock has registered a Golden Crossover and broken out of a bullish flag pattern. A move above Rs.911 is positive, and it can test Rs.945 initially. Maintain a stop loss at Rs.900.

BRITANNIA: The stock has been trading in a tight range for the last few weeks. Barring one day, it has formed parallel highs, which acted as a support earlier. The stock moved above the 20DMA, and it entered an uptrend. It is above the 50DMA. The contracted Bollinger bands suggest an impulse move on the upside. The MACD line on the zero line and is about to give a buy signal. It closed above the Anchored VWAP and TEMA. The TSI is about to give a buy signal. In short, the stock is about to give a big breakout. A move above Rs.3378 is positive, and it can test Rs.3500. Maintain a stop loss at Rs.3305.