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

The pullback rally in benchmark index Nifty continued for the second consecutive trading session. On Wednesday, the Nifty has gained over 1% and closed at the 16955.45 level and above its 5-day EMA level. The daily RSI has given positive crossover. Going ahead, the level of 17025, followed by 17170 will act as strong resistance for the index. Nifty Midcap 100 and Nifty Smallcap 100 has outperformed the benchmark indices.

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

SRF: The stock has formed a Bearish Engulfing candlestick pattern as of October 13, 2021, and thereafter witnessed minor correction. The correction is halted near the 38.2% Fibonacci retracement level of its prior upward move (Rs 1026-Rs 2538) and it coincides with the 20-week EMA level. During this corrective phase stock was oscillating in the range of Rs 2250-1973, which resulted in the formation of Ascending Triangle pattern.

On Wednesday, the stock has given a breakout of Ascending Triangle pattern on the daily chart. This breakout was supported by robust volume. Additionally, the stock has formed a sizeable bullish candle on breakout day, which adds strength to the breakout. There is an uptick in Mansfield Relative Strength, which shows improving price performance compared to the broader market.

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 14-period RSI on the weekly timeframe is in bullish territory. Furthermore, in the recent corrective mode, the RSI never breached its 60 mark, which indicates that the stock is in a super bullish range as per RSI range shift rules. The daily RSI has also surged above the 60 mark for the first time after 44 trading sessions.

In a nutshell, the stock has registered a bullish pattern breakout along with volume confirmation. The stock is likely to touch its prior all-time high of Rs 2538 in the short term. While on the downside, the 20-day EMA will act as strong support for the stock.

Prestige Estates Projects: Considering the daily chart, the stock is trading in a rising channel for the last four months. On Wednesday, the stock has taken support near the demand line of the rising channel and bounced sharply. Further, the stock has formed a sizeable bullish candle. In addition, the reversal from the support zone is supported by a relatively higher volume. Besides, the stock has surged above its short-term 20-day EMA and 50-day EMA.

The momentum indicators and oscillators are also supporting the overall bullish chart structure. The leading indicator, 14-period daily RSI has given a bullish crossover. The fast stochastic is also trading above its slow stochastic line. The daily MACD stays bullish as it is trading above its zero line and signal line. The histogram is suggesting a pickup in upside momentum. Pring's KST has given a fresh buy signal on the daily chart. 

Based on the above observations, we expect the stock to continue its upward movement and test the prior swing high of Rs 487, followed by the demand line of the rising channel, which is currently placed at Rs 537 level.