Tech View: Nifty gives signs of pullback but clear breakout awaited. What traders should do on Thursday
Nifty on Wednesday formed a bullish reversal pattern near the 50-day SMA (simple moving average), which indicated strong possibility of fresh uptrend rally from the current levels.
For the traders now, 19630 would act as a key support level. Above which, the market could continue the positive momentum till 19800-19825.
On the flip side, below 19630 uptrend would be vulnerable, said Shrikant Chouhan of Kotak Securities.
Coming to the OI data, on the call side, the highest OI observed at 19800 followed by 19900 strike prices while on the put side, the highest OI is at 19600 strike price.
Both price and momentum indicators suggest that Wednesday’s low of 19554 may be a short-term bottom and the index is likely to witness a pullback over the next few trading sessions, chart readers said.
What should traders do? Here’s what analysts said:
Jatin Gedia, Sharekhan by BNP Paribas
Nifty has managed to close above the 40-day moving average (19630) and the 61.82% Fibonacci retracement level (19604), which is a sign of strength. The daily momentum indicator has reached the equilibrium line indicating that the correction has matured, and it can start the new cycle, which is a bullish sign.
In terms of levels, 19600 – 19550 is the crucial support zone while 19880 – 19900 shall act as an immediate hurdle zone.
Rupak De, Senior Technical analyst at LKP Securities
Nifty found support at the 50-EMA. The day concluded with the formation of a bullish engulfing pattern.
On the upper side, resistance was found at 19,750. A clear breakout is necessary to anticipate a substantial rally in the index.
A decisive move beyond 19,750 could potentially push the index towards 19,900. On the downside, support is established at 19,600.
(Disclaimer
