Chart Busters:Top trading set-ups to watch for Friday

After over 5% decline in five days, Nifty rose by 2.5% in just two days.

The Nifty almost filled its opening downside gap with a second consecutive day bounce on Thursday. It closed above the 50 and 200 DMAs. After over 5% decline in five days, it rose by 2.5% in just two days.

These kinds of impulsive moves are the characteristics of changing the long-term. The oscillation around 200DMA is also another sign that the long-term trend is changing. The Nifty also closed above the 20Week moving average. But it is still below the previous week's low. Now the question is sustaining the bullish strength. A close below the prior day's low (17215) or at least 17275 would be negative for the market.

Interestingly, on Thursday with a 1.5% rally, the open interest was up by just 0.45%, which shows the rise is mostly because of short covering. Now the immediate resistance is at 17457, which is the gap area. Only above this level, the rally would continue. But in any case, it falls below the 17215 zone of support, and it could resume its downtrend. As the weekend in progress, the long positions may continue to unwind.

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

SUN PHARMA: The stock is trading in a tight range for the past few days and forming a base. The 20DMA acted as strong support for the stock. Bollinger Bands narrowed and indicated an upside move. The MACD is about to give a buy signal, and the RSI is in a strong bullish zone. TSI and KST indicators are also about to give a buy signal. The Elder impulse system has formed a strong bullish candle. It is above the TEMA. The higher volume indicates the buyer's interest. In short, the stock is near the resistance in the base formation. A move above Rs 945 is positive, and it can test Rs 972. Maintain a stop loss at Rs 934.

ADANI PORTS: The stock has broken out of a bullish flag pattern with higher volume. It is above the key moving averages. It is trading above the moving average ribbon along with MACD bullish momentum. The RSI is in the strong bullish zone. ADX (26.43) indicates a strong bullish strength in the trend. The Elder impulse system has formed a strong bullish candle. The stock is above the Anchored VWAP resistance. In short, the stock registered a bullish breakout. A move above Rs 856 is positive, and it can test Rs 889. Maintain a stop loss at Rs 845.