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

On Wednesday, the benchmark index, Nifty has lost 59.75 points or 0.33%. The price action has formed a bearish candle with carrying a lower low and a lower high. The banking benchmark index Bank Nifty has resisted near 50% Fibonacci retracement level of its prior downward move (41829.60-38426.65) and lost over 500 points or 1.34%. The overall advance-decline was tilted in the favour of the decliners.

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

Garden Reach Shipbuilders & Engineers: After registering the high of Rs 239.30, the stock has slid into the period of consolidation. This consolidation has resulted in the formation of a bullish pennant pattern. On Wednesday, the stock has given a bullish pennant pattern breakout. The bullish pennant pole height is almost 54 points. Further, on breakout day the volume was expanded by 17 times of 50-days average volume, which indicates important buying interest. The 50-days average volume was 5.39 lakh while on Wednesday the stock has registered a total volume of 41.32 lakh. Additionally, the stock has formed a sizeable bullish candle on breakout day, which adds strength to the breakout.

Currently, the stock is trading above its short and long-term moving averages. These averages are edging higher. The daily RSI is above the 70 mark and it is in rising mode, which is a bullish sign. The stochastic has also given positive crossover on the daily chart. The trend strength indicator, Average Directional Index (ADX), is above 36, which indicates strength. The +DI is much above the -DI. This structure is indicative of the bullish strength in the stock.

In a nutshell, the stock has registered a bullish pattern breakout along with volume confirmation. As per the measure rule of bullish pattern, the first target is placed at Rs 266 and the second target is placed at 286 level. On the downside, Wednesday’s low of Rs 226.80 will act as crucial support for the stock.

K.P.R. Mill: Majorly, the stock is displaying a bullish trend as it is marking the sequence of higher tops and higher bottoms. Further, it is trading above its short and long-term moving averages. These averages are in the desired sequence, which suggests the trend is strong. On Wednesday, the stock has given falling channel breakout along with robust volume.

The momentum indicators and oscillators are also suggesting further bullish momentum. The leading indicator, RSI has given a downward sloping trendline breakout, which is a bullish sign. The fast stochastic is also trading above its slow stochastic line. The momentum indicator MACD line has crossed above the signal line, which resulted in the histogram turning positive.

Considering the robust technical structure of the stock we believe it is likely to touch new highs. On the upside, the level of Rs 545 will act as resistance for the stock. While on the downside, the 20-day EMA will act as strong support for the stock, which is currently placed at Rs 456 level.