Tech View: Nifty forms Inside Bar candle in pullback rally. What traders should do on Friday
Nifty on Thursday ended 149 points higher to form an Inside Bar candle on the daily chart as it consolidated around the lower half of the previous session's candle on the daily timeframe.
The positive chart pattern like higher tops and bottoms is still intact, as the Nifty managed to make a new higher swing low of 21,905 levels so far on Wednesday. As long as the last higher bottom of 21,860 is protected, the chances of significant downward reversal could be doubtful, said Nagaraj Shetti of HDFC Securities.
Open Interest (OI) data showed the call side displayed the highest OI at 22,400, followed by 22,500 strike price. On the put side, the highest OI was observed at the 22,000 strike price.
What should traders do? Here’s what analysts said:
Rupak De, LKP Securities
Nifty has closed below the 21EMA with a bearish crossover in the RSI. However, bulls managed to push the Nifty back into the rising channel by the session's end, suggesting a possibility of a bullish trend reversal. Looking ahead, the Nifty could encounter resistance in the 22,200-22,250 zone. Clearing the resistance at 22,250 might propel it towards 22,500 in the near term. Support levels are situated at 22,050-22,000.
Jatin Gedia, Sharekhan
On the daily charts, we can observe that Nifty has held on to the support zone of 21,900 – 21,860 where support parameters in the form of the 40-day average and the previous swing low is placed. On the upside, the key hourly averages placed in the zone of 22,200 – 22,240 acted as a resistance and restricted
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