Chart-busters: Top trading set-ups to watch on Monday

The equity market last week recorded two most bullish days and one of the sharpest declines in the last three months. Almost every positional trade has hit a stop loss on both sides.  

On a weekly chart, the index has formed an inside bar. During the last week, the Nifty has experienced huge gap openings on both sides. It has not formed a lower low yet, forming parallel highs around 16283-400. The last six days of price action look like a base formation, which almost resembles the previous base. Gaps are common on both bases. Even after two days of massive move attempts, the index failed to close above the 23.6 per cent retracement level of the prior trend.  

There are several resistances in 16283-623. Apart from the parallel highs, it has 20DMA resistance at 16513, and the gap area resistance is at 16623. Before that, it has two parallel highs at 16283 and 16400. These levels have to be breached to erase the bearish bias present in the market. 

DR REDDY'S LABORATORIES

It has formed a symmetrical triangle and closed at the resistance line, while decisively closing above the 20DMA and 50DMA. The stock has also closed above the moving average ribbon. For the last two days, the massive volume has been recorded and indicates a spurt in the buyer's demand. The MACD has given a fresh buy signal and the RSI moved above the 50 zones and broken the sloping line resistance. The +DMI just crossed the -DMI and indicates the bullish bias. The Elder impulse system has formed a strong bullish bar, whereas the TSI has given a fresh buy signal. In short, the stock is about to register a bullish breakout. A move above Rs 4252 is positive, and it can test Rs 4477. Maintain a stop loss at Rs 4173. 

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The stock has formed a base between Rs 2113-2278, but the volume shrunk. The previous day's Doji candle got a confirmation for a bullish move. Within the base, it broke the sloping line resistance. The RSI has formed a squeeze with higher bottoms, if it moves above 46, a breakout is possible. The stock also closed above the moving average ribbon. Contracted Bollinger bands suggest an impulsive move on the upside. The MACD has given a fresh bullish signal, while the Elder Impulse system has formed a strong bullish bar. The TSI and KST have given bullish signals. In short, the stock is ready to break out of the range. A move above Rs 2220 is positive, and it can test Rs 2277. Maintain a stop loss at Rs 2196.