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

The Nifty failed to get a follow-through day. It also failed to close above the 16297, which is a 23.6% retracement level, as discussed yesterday.

After a massive surging move, the benchmark index failed to continue its momentum. Even the broader market indices closed negatively, indicating the strength in the market is weak. The breadth is not so great, though it is positive. The index opened above the previous day's high and almost touched 16400. Positive bias was limited to the first hour, and later it declined slowly into the negative zone.

On an hourly chart, not even a single bar is closed above the previous bar. It looks like a counter-trend, but we will get the confirmation only a day after. The negative closing is not giving the confidence to go long. After two days of the sharp surge, the RSI has flattened again. The MACD histogram on an hourly chart shows a decline in bullish momentum. The distance between the index and the 20DMA has reduced to 2.38% from 6.4%. As the weekly expiry is in place, we need to be a little careful about the position sizing and risk management.

ITC: The stock closed at the resistance of a bullish flag pattern, at the prior minor high. It decisively closed 2.46% above the 20DMA, and the 50DMA acted as support during the flag formation. The MACD is about to give a buy signal. The RSI is near the strong bullish zone. For the last two days, the volume has been recorded higher. The directional movement indicators at an influx point and the +DMI moved above the -DMI and ADX. The stock is above the Anchored VWAP and the TEMA. The TSI has already given a fresh buy signal. In short, the stock is about to register a bullish flag breakout. A move above Rs.267.5 is positive, and it can test Rs 275 and Rs 282. Maintain a tight stop loss at Rs 264.

POWERGRID: The stock broke the rising trendline resistance and closed crucial support. It closed decisively below the 20DMA and took support at 50EMA. The volume is higher than the last four days. The MACD has given a strong sell signal, while the RSI has confirmed negative divergence bearish implications. The -DMI is just crossing the +DMI. The Elder impulse system has formed a strong bearish bar, whereas the KST and TSI indicators have given a fresh sell signal. The stock also closed below the Anchored VWAP resistance. In short, the stock declined sharply and at the crucial support. A move below Rs 227 is negative, and it can test Rs 219. Maintain a stop loss at Rs 230.