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

On Friday, the benchmark index, Nifty has opened with a minor upside gap. However, the index has resisted near 50% Fibonacci retracement level of its prior downward move (18210.15-16782.40) and witnessed nearly 300 points fall from the day high. The price action has formed a Dark Cloud Cover candlestick pattern. The Nifty Midcap 100 and Nifty Smallcap 100 has outperformed benchmark indices. The overall advance-decline was tilted in the favour of the advancers. The India VIX has surged over 2%.

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

Aditya Birla Capital: On Friday, the stock has given downward sloping trendline breakout on the daily chart. This breakout was confirmed by robust volume above 50-days average volume. Currently, the stock is trading above its short and long-term moving averages. These averages are in a rising trajectory.

The stock's Relative Strength Index (RSI) has reached its highest value in the last 14-days, which is bullish. Also, it has surged above its prior swing high. The weekly RSI is also in rising mode. On the daily timeframe, ADX is 10.97 which suggests that the trend is yet to be developed. Directional indicators continue in the ‘buy’ mode as +DI continues above –DI.

Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 124 followed by Rs 128 in the short term. On the downside, the level of Rs 107.50 will act as a strong support zone for the stock.

Alicon Castalloy: Considering the daily chart, the stock is trading in a falling channel for the last 79 trading sessions. Currently, it is on verge of giving a downward sloping trendline breakout on the daily chart. On the weekly chart, the stock has formed a sizeable bullish candle. Further, since the last two trading sessions the volumes recorded were above the 50-days average, which is a sign of accumulation before actual breakout happen.

Majorly, the stock is displaying a bullish trend as it is trading above its short and long-term moving averages. These averages are in a rising trajectory, which is a bullish sign. The leading indicator, 14-period daily RSI is currently quoting at 63.81 and it is in rising mode. The weekly RSI has also given bullish crossover. The fast stochastic is trading above its slow stochastic on both weekly and daily charts.

Going ahead, in case the stock is sustained above the trendline resistance then we may see a sharp upside in the stock. The trendline resistance is placed in the zone of Rs 875-880 level. On the downside, the 20-day EMA will act as crucial support for the stock.