Tech View: Nifty forms Bullish Island Reversal pattern. What traders should do on Friday
Nifty on Thursday ended 110 points higher to form a Bullish Island Reversal pattern on the daily chart. The formation, analysts say, opens up a potential upside opportunity of up to 19,726 levels in the short term.
The broader negative chart pattern like lower tops and bottoms is intact as per the daily timeframe chart and further upside from here could open chances of new lower top formation.
The display of further strength in the current upside bounce could possibly pull the Nifty towards 19,726 levels. Any failure to sustain the highs is expected to trigger fresh weakness from the lower highs, said Nagaraj Shetti of HDFC Securities.
What should traders do? Here’s what analysts said:
Jatin Gedia, Sharekhan by BNP Paribas
The recent correction has halted around the 20-week moving average (19,320) and now we expect a relief rally over the next few trading sessions.
On the upside, we expect the pullback till 19,780 – 19,800, which coincides with the 50% Fibonacci retracement level and the 20-day moving average. In terms of levels, 19,460 – 19,480 is the crucial support zone while 19,670 – 19,700 shall act as an immediate hurdle zone.
Rupak De, Senior Technical analyst at LKP Securities
Nifty has shown an upward movement following a hammer formation on the daily timeframe.
Additionally, there is a hidden positive divergence observed on the daily RSI. The strength of the trend is expected to persist as long as the index stays above 19,430.
On the upper side, 19,600 may act as immediate resistance. A decisive move above 19,600 could propel the index to higher levels.
Shrikant Chouhan, Head of Research (Retail), Kotak Securities
Technically, as long as Nifty is holding the 19,450 level, the positive sentiment is likely to
