Chart Busters: Top trading set-ups to watch out for Friday

In a session that witnessed a strong corrective move, the NIFTY declined and ended with a net loss of 219.80 points (-1.24%). The index reversed its trajectory from near the 20-DMA which it could not move above; it also slipped below the 100-DMA levels which are at 17647 on a closing basis. A strong black candle emerged near the resistance zone of 100-DMA and 20-DMA; the emergence of a strong black candle increases the credibility of this resistance area. The NIFTY is now expected to remain in a broad trading range that comprises 50-DMA on the lower side at 17467 and the 100-DMA of 17647 on the higher side. NIFTY is expected to stay in this defined zone until a directional bias is established.

Here are the top trading set-ups to watch out for Friday 

PRAJ INDUSTRIES  

Over the last seven months, the stock has remained in a defined trading range of 310-398; the most recent price action has seen a formation of a pennant which often acts as a continuation pattern. The stock attempted a breakout above 410-420 area. However, instead of a clean breakout, the price action formed a pennant. The price has attempted to break out of this congestion area and may have a fresh breakout in place. The RSI is neutral and does not show any divergence against the price. While the MACD is bullish; the PPO has turned positive with a fresh PSAR buy signal. If the present price pattern resolves on the expected lines, the stock may test 470-490 levels. Any move below the 400 levels will negate this view.

TATA MOTORS

After marking its high in October 2021, TATA MOTORS has been in a sideways trading range. The stock has remained in a trading zone of 446-540 levels. It has not taken any directional call over the past quarter. Right now, the stock is inside the leading quadrant of the RRG; it is likely to outperform the broader markets. The PPO has turned positive. The RSI is showing a mild bullish divergence against the price. The OBV—On Balance Volume has marked a new high ahead of the actual price breakout which is a strong sign. With a continuing PSAR buy signal, the stock may test 540-555 levels so long as it is able to trade above 482 levels.