Tech View: Call writers run for cover as Nifty ends above 19,750. What traders should do on Tuesday

economictimes.indiatimes.com:

Nifty on Monday resumed the uptrend after a two-day fall and ended about 108 points higher above the 19,750 mark to form a green candle with a minor lower shadow on the daily chart. After forming a series of higher highs and higher lows over the last 2 months, Nifty seems to have formed minor degrees of lower highs and lower lows in the last 4-5 sessions amidst range movement. This pattern could be reflecting ongoing consolidation in the market.

However, a sustainable move above 19,870 levels is expected to negate this bearish pattern, Nagaraj Shetti of HDFC Securities. Nifty Futures Open Interest (OI) indicated a build-up of fresh long positions. FIIs have, however, been liquidating their long positions since 21st July after Nifty made an all-time high of 19,992 on 20th July.

The RSI is currently in a bearish crossover, suggesting a potential downside. Put Writer additions were observed in 19,600 and 19,700 strikes, indicating that the downside support is getting stronger, analysts said.What should traders do? Here’s what analysts said:Rahul Ghose, Founder & CEO, HedgedToday's sharp-up move saw call writers run for cover. There was significant short covering in the sold calls and put writing also emerged for this week's expiry and the monthly expiry.

Nifty has a strong base between 19,400 and 19,550 with upside targets open. Bank Nifty on the other hand has to cross above the 46,300 level to start an up move again. The max pain level of Bank Nifty has not yet shifted from the 45700 level and any rallies up to this level are likely to get sold into.Osho Krishan, Sr. Analyst, Technical & Derivative Research, Angel OneAs far as levels are concerned, 19600 is likely to act as a cushion, while the pivotal zone of 19500,