Trading Setups For the Coming Week
Sharing actionable trading setups with detailed charts in both Cash & Derivative markets to set you up for the following week.
Good Morning Traders!
As suggest in the previous newsletter, Nifty50 dwindled to fresh lows, falling by 600 points on Monday, before staging another pullback rally throughout the week, and as is the norm, again sold-off on Friday.
Interesting thing is that weekly candle yet closed in green, indicating the coming week could show some upside. Broader market showed promising signs, with quite a few counters breaking out of ranges and showing strength and outperforming the index.
I have covered a few of them below, with a few watchlist-worthy counters and support-plays added in the mix along with derivative trades. Read on to find out!
FnO Space
I have provided below 2 setups which are on the short side, both showing considerable weakness and providing favourable risk-reward opportunities. I’d suggest to short futures or buy puts / put spreads rather than sell calls as gamma risk is high owing to expiry being 1 week away. Here are the trades below -
SHRIRAM TRANSPORT DEC FUTURES (CMP - 1177.4)
The counter has broken through a support zone @ 1215-1240 & is trading below all important averages. After initial breakdown, it gave a pullback, and has resumed it’s bearish trend. Shorts can be taken here, with targets of 1100 and SL above 1230 on a closing basis.
HERO MOTOCORP DEC FUTURES (CMP - 2393.1)
Similar to the one above, this counter has also broken support zone @ 2420-2440, is trading below all important averages, and has resumed selling after a pullback. Shorts can be initiated here as well with targets @ 2300, with SL coming above 2440 on a closing basis. Do remember the trade execution mentioned in the heading!
Stocks-In-Consolidation
These stocks are trading in defined ranges and are poised to give substantial moves depending on which side they break their zones. Here are a few setups which can be added to the watchlist to watch for breakouts and catch the ensuing up-move, or exit existing positions is case of a breakdown from the consolidation.
DELTA CORP (CMP - 263)
This one has been in consolidation for the past 2 months and is doing so near it’s all-time highs. Any upside breakout can be of huge potential and certainly should be one to watch for. Target 50 points from the area of breakout/breakdown with SL below the upper/lower trendline of triangle on a closing basis. (Giving both sides as this counter is present in derivatives too!)
CENTURY PLY (CMP - 582.6)
This stock in consolidating in a Falling Wedge pattern, which is inherently bullish. One thing to keep in mind is after a breakout, price takes some time to achieve the target, so patience is important. IF it does breakout, one can target 150 points from the area of breakout, with an SL below the upper trendline of the wedge. Do read the SL explanation in chart below, as it can be a bit tricky.
Breakout Retest / Support Trades
Some of the counters have retraced to their breakout zones while others are visiting their strong support zones. Such price movements provide superb setups in terms of R:R and can be traded easily as well. Here are couple of them below -
DEVYANI INTERNATIONAL (CMP - 167.6)
This counter has retraced to it’s previous breakout zone, doing so on shrinking volume. While it is yet to give reversal signs, volume activity is encouraging. One can initiate longs AFTER reversal signs are imminent, targeting previous swing highs and beyond @ 195/210, with SL below 160 on a closing basis.
ICICI PRUDENTIAL LIFE INSURANCE (CMP - 564.3)
This stock has retraced towards a multi-year support zone on the weekly chart @ 520-540, and has also made a bullish reversal candle. One needs to be patient with this trade, as it rarely shows momentum. Rise can be slow. Target previous swing highs and above @ 680/720 positionally, with SL below 510 on a weekly closing basis.
Breakout Stocks
Concurring with the improving broader market, these counters showed immense buying activity, with one breaking out above a multi-year resistance zone. Both scaling fresh life-time highs, these look poised for further gains. Read below to know which are those!
GATI LIMITED (CMP - 189.5)
This stock broke above crucial resistance zone with very heavy volume activity and closed at a fresh all-time high on the weekly timeframe. Longs can be initiated at current levels. Using fibonacci retracements, targets have been measured at 220/245, with SL below 170 on a weekly closing basis.
SMARTLINK HOLDINGS (CMP - 143.1)
This counter scaled fresh life-time highs as well, taking out a multi-year resistance zone in the process. Breakout occured on extremely heavy volume activity as well. Longs can be initiated at current levels or on a pullback @ 135-130 for better risk:reward, targeting levels of 170/185 positionally, with SL below 120 on a daily closing basis.
PS- Microcap, so will be volatile, therefore manage risk!
That’s it from my side for the coming week as far as trade setups are concerned. I will be back next week again with different setups as well! Please undertake appropriate risk management while taking every trade.
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Disclaimer - Charts, analysis and trading ideas shared above are purely for educational purposes. Please consult your financial advisor before taking action in financial markets.