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

The benchmark index, Nifty has witnessed a fierce sell-off on Friday. The index has lost 263.20 points or 1.53%. On the daily chart, the index has given a breakdown of the bearish flag pattern. The bearish flag pole height is 1430 points. On Friday, the index slipped below its 100-day EMA level and the daily RSI slipped below the 40 mark, which is a bearish sign. The banking benchmark index, Bank Nifty has lost 2.54%. The Bank Nifty has slipped below the 200-day SMA level. The overall advance-decline was tilted in the favour of the decliners. The India VIX has surged nearly 3%.

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

Gokul Refoils & Solvent: From the low of Rs 7.50, which was registered in the last week of March 2020, the stock has maintained its rhythm of higher tops and higher bottoms on the weekly chart. Further, it is trading above its short and long-term moving averages on both weekly and daily charts. This clearly indicates that the stock is in a strong uptrend.

On Friday, the stock has given stage-2 cup pattern breakout on the daily chart. The depth of the cup pattern is 29% and its length is of 26 days. Further, this breakout was supported by a robust volume of over 6 times of 50-days average volume. This indicates strong buying interest by market participants. The 50-days average volume was 4.31 lakh while on Friday the stock has registered a total volume of 26.40 lakh. Also, it has formed a sizeable bullish candle on breakout day.

Interestingly, the daily RSI has taken support near the 60 zone and surged above its prior swing high, which indicates that the stock is in a super bullish zone as per RSI range shift rules. The daily MACD stays bullish as it is trading above its zero line and signal line. The MACD histogram is suggesting a pickup in upside momentum.

In a nutshell, the stock has registered a bullish pattern breakout along with volume confirmation. As per the measure rule of cup pattern, the upside target is Rs 53 level. On the downside, the 20-day EMA will act as strong support for the stock.

Wipro: The stock has formed a hammer candlestick pattern as on the weekend of March 20, 2020, and thereafter marked the sequence of higher tops and higher bottoms. From the low of Rs 159.40, the stock has gained 364% in 82 weeks. After registering the high of Rs 739.85, the stock has witnessed minor correction. During the corrective phase, the volume activity was mostly below 50-weekly average volume. Hence, it should be viewed as a routine decline after a robust move. The throwback halted near the 38.2% retracement level of its prior upward move (Rs 397.75-Rs 739.85).

Since the last couple of trading sessions, the stock has formed a strong base near the support zone and on Friday it has given consolidation breakout along with robust volume. Also, the stock has surged above its 50-day EMA level and it has started edging higher, which is a bullish sign.

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 the 60 mark after a span of 37 trading sessions. The weekly RSI has also witnessed a bullish crossover.

Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 687, followed by Rs 740 in the short term. On the downside, the 50-day EMA will act as strong support for the stock.