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

In a disappointing start to the week, NIFTY ended with a net loss of 302.70 points (-1.73%). The markets suffered broad-based losses; the PSU Bank Sector index was the only index that ended with gains. All other sector indexes ended in the negative. The Index has formed a strong black candle. While this reflected the strong bearish trend for the day, it also dragged the nearest resistance level down to 50-DMA which is at 17442. NIFTY is likely to keep drifting lower or at least trade on a tepid note. Major support exists at 16900-17000 levels.

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

POWERGRID

POWERGRID is one of the most resilient stocks when compared to the broader markets. The price action over the past quarter shows the stock testing a double top resistance in the 210-215 zone. The stock marked an incremental high but could not show a comprehensive breakout. Presently, it is trading in a sideways trajectory, trapped in a narrow trading range. While it trades above all the key moving averages, it looks at a potential resumption of up move. The RSI is neutral and does not show any divergence against the price. MACD is above the zero line; it is moderately bearish, but the Histogram shows a likely positive crossover in the coming days. The RS line against the broader markets remains in a firm uptrend and above the 50-DMA. The stock may test 220-225 levels if it is able to keep its head above 200 levels.

SRF LTD (SRF) 

The stock tested a classical double top resistance at 2530; it failed to break above this resistance convincingly despite an incremental high and returned inside the trading range. A strong volume-based move and relative strength against the broader markets shows a possibility of the stock resuming its up move and making an attempt to break above the double top resistance. The RSI is neutral and does not show any divergence against the price. While MACD is bearish, the slope of the Histogram shows the possibility of a crossover in the coming days. The OBV trades near its high point. While the stock is inside the lagging quadrant of the RRG when benchmarked against the broader NIFTY 500 index, it is showing a strong improvement in the relative momentum against the broader markets. If the stock is able to defend the 2360-2380 zone, it has the potential to test 2530-2600 levels.

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