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

On Wednesday, the benchmark index, Nifty has lost over 100 points or 0.56%. The price action has formed a bearish candle with a long upper shadow. For the last 13 trading sessions, the index is trading in a rising channel. Currently, the index is at a lower trendline of the rising channel and any sustainable move below the zone of 17870-17850 will lead to a sharp fall in the index.

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

Aarti Industries: Considering the daily chart, the stock has given a downward sloping trendline breakout as of October 04, 2021, and thereafter witnessed a 21% upside in just 11 trading sessions. On October 19, 2021, the stock has formed a bearish engulfing candlestick pattern and thereafter witnessed correction.

During the correction, the stock has retested the breakout level. The stock formed a strong base near the trendline support and started rising higher. On Wednesday, the stock has formed a sizeable bullish candle on the daily chart. The reversal from trendline support was further justified by above 50-days average volume. Further, on Wednesday, the stock has surged above its 20-day EMA and 50-day EMA level, which is a short-term bullish sign.

The momentum indicators and oscillators are also supporting the overall bullish price structure. The 14-period daily RSI took support in the zone of 40-38 historically many times and this time also it bounced exactly from the same level. The daily RSI is trading above its 9-day average and it is in rising mode. The MACD histogram is about to cross the zero line and stochastic has already given bullish crossover.

Going ahead, as the stock has reversed from the support zone, the risk-reward is quite favourable at the current level for initiating the long position. On the upside, the level of Rs 1017, followed by Rs 1046 will act as minor resistance for the stock. While on the downside, the 100-day EMA will act as major support for the stock.

Welspun Corp: On Wednesday, the stock has given downward sloping trendline breakout on the daily chart. This breakout was supported by robust volume. Further, the stock has formed a sizeable bullish candle on breakout day.

All the moving averages based on trade set-ups are showing a bullish strength in the stock. Daryl Guppy’s multiple moving averages is suggesting a bullish strength in the stock. The stock is trading above all the 12 short and long term moving averages. The averages are all trending up, and they are in a sequence.

The leading indicator, 14-period daily RSI is currently quoting at 68.76 level and it is in rising mode. The directional movement index is also at a strong point. The ADX is at 26.48 and +DI is above the –DI and ADX on the daily time frame. The MACD is above the zero line and the signal line. The MACD histogram suggests bullish momentum. And most importantly, the MACD line has crossed the prior swing highs.

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 8-day EMA will act as strong support for the stock, which is currently placed at Rs 143.75 level.