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

On Wednesday, the benchmark index Nifty resisted near the 34-day EMA level and witnessed a correction of 72 points from the day’s high. The price action has formed a doji candlestick pattern, which suggests indecisiveness among the traders and investors. On the hourly chart, the RSI is showing a negative divergence, which suggests limited upside. The daily RSI has also failed to cross the 50 mark. Going ahead, the important levels to watch out for would be 17286 on the higher side and 17175 on the downside. A break on either side would open doors for a directional move.

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

Balrampur Chini Mills: After registering the high of Rs 398, the stock has witnessed correction. The correction is halted near the 38.2% Fibonacci retracement level of its prior upward move (Rs 157-Rs 398). For the last 9-weeks, the stock is oscillating in the range of Rs 346.45-Rs 297 and formed a strong base near the support zone.

On Wednesday, the stock has given a 9-week base pattern breakout on the daily chart. This breakout was supported by a robust volume of nearly 5 times of 50-days average volume. This indicates strong buying interest by market participants. The 50-days average volume was 11.40 lakh while on Wednesday the stock has registered a total volume of 54.81 lakh. Also, the stock has formed a sizeable bullish candle on breakout day.

The Relative Strength Index (RSI) has reached its highest value in the last 14-days, which is bullish. Also, it has managed to close above its prior swing high. The weekly RSI has also given bullish crossover. The daily MACD stays bullish as it is trading above its zero line and signal line. Pring's KST has given a fresh buy signal on the weekly chart.

Considering the robust technical structure of the stock we believe it is likely to touch the level of Rs 380, followed by Rs 398 level. On the downside, the 8-day EMA will act as immediate support for the stock, which is currently placed at Rs 335.70 level.

Ami Organics: Considering the daily chart, the stock has given neckline breakdown of Adam and Adam double top pattern and thereafter witnessed sharp correction. From the high of Rs 1418.70, the stock has corrected nearly 40%. Since the last 24 trading sessions, the stock is oscillating in the falling channel.

It has formed a strong base in the zone of 864-858 and thereafter initiated its northward journey. On Wednesday, the stock has given falling channel breakout on the daily chart along with robust volume. Along with this breakout, it has surged above its 50-day EMA level. The 20-day EMA and 50-day EMA has started moving higher, which is a bullish sign.

The leading indicator, 14-period daily RSI has surged above the 60 mark and it is in a rising trajectory. The fast stochastic is also trading above its slow stochastic. On the daily timeframe, ADX is 15.80 and 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 1138, followed by Rs 1204 in the short term. On the downside, the 20-day EMA will act as strong support for the stock.