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

The benchmark index, Nifty has witnessed a fierce sell-off on Monday. The Nifty has lost 2.66% or 468.05 points. The index has slipped below its 100-day EMA level. However, in the last hour of the trading session, the index has recovered 151.25 points. The price action has formed a sizeable bearish candle. The 14-period daily RSI has slipped below the 40 mark and it is in falling mode. The Nifty Midcap and Nifty Smallcap has underperformed the frontline indices. On Monday, the advance-decline ratio was strongly in the favour of decliners. The Indian Volatility Index (VIX), a gauge for the market’s short-term expectation of volatility, surged by nearly 21% to end at a 22.82 level. Interestingly, the India VIX is on verge of giving a downward sloping trendline breakout on the daily chart.

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

Piramal Enterprises: On Monday, the stock has given a breakdown of the Symmetrical Triangle pattern on the daily chart along with higher volume. Also, the stock has formed a sizeable bearish candle on breakdown day. Further, the stock is tumbled below its crucial 200-Day EMA level for the first time after February 01, 2021.

The short-term moving averages, i.e. 20-day EMA and 50-day EMA has started edging lower. The rising slope of 100-day EMA has been slowed down significantly, which is a bearish sign. The momentum indicators and oscillators are also supporting the overall bearish chart structure. The leading indicator, 14-period daily RSI is slipped below the 30 mark and it has also given an upward sloping trendline breakdown. The fast stochastic is also trading below its slow stochastic line. Further, the MACD histogram is suggesting a pickup in downside momentum.

Technically, all the factors are currently aligned in support of the bears. Hence, we would advise the traders to be with a bearish bias. As per the measure rule of the symmetrical triangle pattern, the downside target is placed at Rs 2270, followed by Rs 2125 level.

Indian Railway Catering and Tourism Corporation: On October 19, 2021, the stock has formed a Bearish Engulfing candlestick pattern and thereafter witnessed a fall of over 41% in just 8 trading sessions. After registering the low of Rs 639.45, the stock has witnessed a pullback rally. For the last 39 trading sessions, the stock is trading in a rising trendline on the daily chart.

On Monday, the stock has given a breakdown of the demand line of the rising channel on the daily chart, which is a bearish sign. This breakdown was confirmed by above 50-days average volume. In addition, the stock has formed a sizeable bearish candle on the daily chart. Further, on Monday, the stock has slipped below its 50-day EMA level.

The 20-day EMA and 50-day EMA has started edging lower, which is a bearish sign. The leading indicator, 14-period daily RSI has slipped below its 40 mark. The RSI is in falling mode and it is trading below its 9-day average. On the weekly chart, the RSI is slipped below the 60 mark. The slow stochastic is trading below its fast stochastic line on both weekly and daily timeframe. The -DMI is above the +DMI and ADX and the –DMI is in a rising trajectory.

Based on the above observations, we expect the stock to continue its downward movement and test levels of Rs 750 in the short term. Below this level, it can test a panic low of Rs 639.45, which was registered on October 29, 2021. On the upside, a 50-day EMA will act as resistance for the stock.