Chart Busters: Top trading set-ups to watch out on Thursday

On Wednesday, the benchmark index Nifty was closed at 18017.20 level with a loss of 27.05 points or 0.15%. The price action of the day formed a small body bullish candle, carrying shadows on either side. The leading indicator, RSI has given a bearish crossover on the daily chart. The Indian Volatility Index (VIX), a gauge for the market’s short-term expectation of volatility, surged by 1.89% t to end at 16.30.

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

UPL: After registering the high of Rs 864.70, the stock has marked the sequence of lower tops and lower bottoms. The correction is halted near the 200-day EMA level. The stock has formed a strong base near long-term 200-day EMA and thereafter started its northward journey.

On Wednesday, the stock has given downward sloping trendline breakout on the daily chart. This breakout was confirmed by the 50-day average volume. Currently, the stock is trading above its short and long-term moving averages. The short-term 20-day EMA and 50-day EMA has started edging higher, which is a bullish sign. The leading indicator, 14-period RSI has surged above the 60 mark for the first time after 76 trading sessions. The momentum indicator MACD line has crossed above the signal line, which resulted in the histogram turning positive.

The technical evidence indicates a strong upside in the coming weeks. On the upside, the level of Rs 796 will be the major hurdle for the stock. While on the downside, the zone of Rs 740-735 will act as strong support for the stock.

Force Motors: Considering the daily chart, the stock has given a downward sloping trendline breakout along with robust volume. In addition, the stock has formed a sizeable bullish candle, which adds strength to the breakout.

From a technical standpoint, it is comfortably placed above its key moving averages i.e. over 11% and nearly 22% from 50-DMA & 200-DMA. The 10, 30, and 40-week averages are trending higher. These averages are in an ascending order, which suggests the trend is strong. The trend strength indicator, Average Directional Index (ADX), is above 21 and it is in rising mode, which indicates strength. The +DI is much above the -DI. This structure is indicative of the bullish strength in the stock.

Considering the above factors, we expect the stock to test levels of Rs 1700 followed by Rs 1750 in the medium term. On the downside, the 8-day EMA will act as immediate support for the stock, which is currently placed at Rs 1517.20 level.