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

NIFTY’s move inflicts structural damage on charts.

The geopolitical tensions between Russia and Ukraine invited a wave of global weakness. The Indian equity markets were not spared either, as they saw a large corrective wave. The NIFTY opened with a gap down, grew weaker as the day progressed, and closed near to its low point with a net loss of 531.95 points (-3.06%). NIFTY has tested the 200-DMA, which presently stands at 16798; NIFTY’s staying above this point will be extremely crucial to avoid a breakdown. In the process, a falling window has occurred on the candles; this usually resolves with the continuation of the downtrend. However, this will need confirmation on the next day.

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

LTTS

LTTS has corrected from 6000 levels; presently it has shown some mild intention to halt its decline. The price is near to the 200-DMA which presently stands at 4146. RSI has shown a bullish divergence against the price. While the price formed lower lows, the RSI did not and this resulted in a bullish divergence. On the candles, a candle with a long lower shadow appeared. Its appearing near the support area of 200-DMA may lead to a potential base formation. The stock may test 4550 and 4650 levels. Any move below 4240 on a closing basis will negate this view.

UFLEX

UFLEX has seen a strong volume-based breakout after trading in a range between 520-550 levels. The high and above-average volume supports this move. The OBV has marked a new high which also can be seen as a confirmation on the volume front. The RS line against the broader markets has shown a sharp rise, it now trades above its 50-DMA. The stock remains in the leading quadrant of the RRG; it is expected to relatively outperform the broader NIFTY500 index. PSR has shown a fresh buy signal. If the breakout continues, the stock can test 590 and 620 levels. SL of 520 must be maintained on a closing basis.