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

On Tuesday, the benchmark index Nifty opened with an upside gap and surged above its crucial resistance zone of 17160-17180 level. Interestingly, the index has surged above its 20-day EMA level and it has started edging higher. The daily RSI is currently quoting at 49.77 and it is in rising mode. The Nifty Midcap 100 and Nifty Smallcap 100 has outperformed the benchmark indices. The advance-decline ratio was in the favour of advancers.

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

Avadh Sugar & Energy: The stock has formed a Spinning Top candlestick pattern as of June 29, 2021, and thereafter witnessed correction. During this correction, the stock has taken support in the zone of Rs 400-396 level four times and witnessed a strong bounce back. Since the last 23 trading sessions, the stock was oscillating in the range of Rs 452-Rs 396 zone.

On Tuesday, the stock has given consolidation breakout along with robust volume. This trendline breakout came with a rise in the daily range. The last 10-days average daily range average is 13.70 points while on Tuesday, the stock has witnessed 57.15 points range. Further, it has formed a sizeable bullish candle, which adds more bullish sentiments.

On breakout day, the stock has also surged above its 20-day EMA, 50-day EMA and 100-day EMA levels. The leading indicator, 14-period daily RSI is currently quoting at Rs 64.35 and it is trading above its 9-day average line.

Considering the robust technical structure of the stock we believe it is likely to touch the level of Rs 479, followed by Rs 490 level. On the downside, the 20-day EMA will act as strong support for the stock.

ITI: Considering the daily chart, the stock is oscillating in the range of Rs 123-107 since the last 27 trading sessions, which resulted in the formation of a Symmetrical Triangle on the daily chart. On Tuesday, the stock has given a breakout of the Symmetrical Triangle pattern on the daily chart. This breakout was confirmed by more the five times of 50-days average volume. Further, on breakout day, the stock has surged above its long-term moving averages, i.e. 100-day EMA and 200-day EMA levels.

Interestingly, the 20-day EMA and 50-day EMA has started edging higher. Besides, the falling slope of 100-day EMA and 200-day EMA has been slowed down considerably. This is a bullish sign. The 14-period daily RSI has surged above the 60 mark for the first time after 47 trading sessions. Recently, the daily RSI has taken support near the 40 mark and thereafter bounced sharply. The daily MACD stays bullish as it is trading above its zero line and signal line.

Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 133, followed by Rs 140 in the short term. On the downside, the 20-day EMA is likely to provide the cushion in case of any immediate decline. The 20-day EMA is currently placed at Rs 115.80 level.