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

After a day of wavering moves, the benchmarks tumbled and filled the gap of May 30. It opened with a gap down and formed a candle similar to the previous day. But the difference is it closed below the opening. 

As the Nifty filled the gap support area and closed at a seven-day low, it is a signal for further weakness. It also tested the 38.2% retracement level of the current swing. The current swing is more complex than the recent swings, either up or down. There has been a cluster of consolidations in the last 17 trading sessions and the current counter-trend rally has not formed any pattern. As the price structure is typical, and the index moves in a zig-zag manner, it has become very difficult to find decisive trade. In a directionless market, the risk-reward ratios will not be favourable. 

By closing below, the current base low, the Nifty has given a clear breakdown signal. Three successive negative closings are an indication of the exhaustion of a trend. A close below 16370-300 will further confirm the downward move and will test the prior low. Going forward, a move above 16644 and 16840 will give confidence to the bulls. Otherwise, the bears will dominate the market direction.  

PIIND  

The stock broke the upward channel support and closed just on the 20DMA support breaking the moving average ribbon. The 50DMA and the 200DMA acted as strong resistance points. The MACD line failed to move above the zero line, and the positive histogram is declining. The volume has been recorded higher for the past two days, while the -DMI moved above the +DMI and ADX. The Elder impulse system has formed a bearish candle, and it is below the TEMA, below the Anchored VWAP support and resistances. In short, the stock also ended its counter-trend rally. A move below Rs 2589 is negative, and it can test Rs 2480 and Rs 2400. Maintain a stop loss at Rs 2650. 

HINDUNILVR 

The stock has broken the double top pattern and the rising trendline support. It is decisively below the 20DMA and moving average ribbon. The 50DMA support is at Rs 2189. The MACD shows a strong bearish momentum, while the RSI has also declined below the prior lows and shifted its range towards the downside. The directional indicators are at an influx point, and a crossover by -DMI will be a negative for the stock. The Elder impulse system has formed three consecutive bearish bars and the KST and TSI indicator has given sell signals. It closed at Anchored VWAP support. In short, the stock ended its counter-trend rally. A move below Rs 2210 is negative, and it can test Rs 2189 Immediately. Maintain a stop loss at Rs 2250.