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

The Nifty index has continued its downward journey for the third consecutive trading session closing down by 181.40 points or 1.01%. The index has slipped below its 20-day EMA level. However, in the last hour of the trading session, Nifty recovered almost 129.40 points. Going ahead, the zone of 17630-17600 will act as strong support for the index as it is the confluence of 38.2% Fibonacci retracement level of its prior upward move (16410.20-18350.95) and 50-day EMA level. Interestingly, the Nifty Midcap 100 and Nifty Smallcap 100 indices have outperformed the frontline indices. The market breadth on Thursday was in favour of bulls as the advancers outnumbered the decliners.

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

HIL: The stock has formed a Spinning Top candlestick pattern as of August 02, 2021, and thereafter witnessed over 42% correction in 95 trading sessions. However, the correction is halted near the 50-week EMA level and it has started rising higher.

On Thursday, the stock has given downward sloping trendline breakout on the daily chart. This breakout was confirmed by a robust volume of more than 6 times of 50-days average volume, indicating strong buying interest by market participants. Additionally, the stock has formed a sizeable bullish candle on breakout day, which adds strength to the breakout.

Further, on Thursday, the stock has surged above its 20-day EMA, 50-day EMA and 100-day EMA levels. The stock's Relative Strength Index (RSI) has reached its highest value in the last 14-days, which is bullish. Also, it has managed to close above its prior swing high. On the daily timeframe, ADX is 10.58 which suggests that the trend is yet to be developed. Directional indicators continue in the ‘buy’ mode as +DI continues above –DI.

Considering the above factors, we expect the stock to test levels of Rs 5200 followed by Rs 5375 in the medium term. On the downside, the 20-day EMA will act as strong support for the stock, which is currently placed at Rs 4500 level.

Banswara Syntex: Majorly, the stock is displaying a bullish trend as it is marking the sequence of higher tops and higher bottoms on the weekly chart. On January 10, 2022, the stock has formed a shooting star candlestick pattern and thereafter witnessed minor throwback along with low volume. The throwback is halted near the 38.2% Fibonacci retracement level of its prior upward move and it coincides with 13-day EMA level.

On Thursday, the stock has given a 9-days consolidation breakout along with robust volume. Also, it has formed a sizeable bullish candle. As the stock is trading at its all-time high level, it is comfortably placed above its key moving averages i.e. around 67% and 98% from 50-day EMA as well as 200-day EMA, respectively.

The leading indicator, 14-period daily RSI is in the super bullish zone and it has given bullish crossover. The daily and weekly MACD stays bullish as it is trading above its zero line and signal line. The MACD histogram is suggesting a pickup in upside momentum. The stock is clearly on an uptrend and trend strength is extremely high. The Average Directional Index (ADX), which shows trend strength, is as high as 58.86 on a daily chart and 28 on a weekly chart. Generally, above 25 levels are considered as a strong trend. In both time frames, the stock is meeting the criteria.

Technically, all the factors are currently aligned in support of the bulls. Hence, we would advise the traders to be with a bullish bias. On the downside, the 13-day EMA will act as strong support for the stock.