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

On Monday, the benchmark index Nifty has surged above the psychological level of 18000 for the first time after 35 trading sessions. With this up move, the index has given the three days consolidation breakout. The price action has formed a sizeable bullish candle, which is a bullish sign. Interestingly, the leading indicator, 14-period daily RSI has taken support near the 60 mark and bounced, which suggest a super bullish range shift as per the RSI range shift rules. The MACD histogram is suggesting a pickup in upside momentum. Going ahead, the level of 18210.15, will act as crucial resistance for the index.   

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

Tata Motors: After registering the high of Rs 536.70, the stock has witnessed correction along with low volume. The correction is halted near the 38.2% Fibonacci retracement level of its prior upward move.  

On Monday, the stock has given downward sloping trendline breakout on the daily chart. This breakout was confirmed by robust volume. Also, the stock has formed a sizeable bullish candle. Currently, the stock is trading above its short and long-term moving averages. These averages are in the desired sequence, which suggests the trend is strong.  

The leading indicator, 14-period daily RSI has surged above the 60 mark for the first time after 34 trading sessions. Interestingly, the weekly RSI is in the super bullish zone and it has given a positive crossover. 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. On the daily timeframe, ADX is 10.74 which 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 537, followed by Rs 550 level. On the downside, the level of Rs 477 will act as immediate support for the stock.  

Shiva Mills: On December 28, 2021, the stock has given downward sloping trendline breakout and thereafter gained nearly 51% in just three trading sessions. After registering the high of Rs 173.60, the stock has witnessed a minor throwback. During this throwback phase, the volume was mostly below the 50-day average volume, which suggests its routine decline after a robust move. The correction is arrested near 38.2% Fibonacci retracement level of its prior upward move (Rs 104.05- Rs 173.60) and it coincides with short term 8-day EMA level. 

The stock has formed a strong base near the support zone and on Monday, it has given the breakout of base formation on the daily chart. This reversal from the support zone is further justified by robust volume. Interestingly, the 14-period RSI on the daily timeframe is in bullish territory. Furthermore, in the throwback phase, 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 MACD is above the zero line and the signal line. The MACD histogram suggests bullish momentum. And most importantly, the MACD line crossed the prior swing highs.

The technical evidence indicates a strong upside in the coming trading sessions. The prior all-time high of Rs 173.60 will act as minor resistance for the stock. While on the downside, the level of Rs 146 will act as strong support for the stock.