Tech View: Nifty starts forming higher bottom. What traders should do on Wednesday
Nifty on Tuesday which ended about 177 points higher to form a bullish inverted head and shoulder pattern on the daily chart.
The positive chart pattern like higher tops and bottoms has started to form and Monday's swing low of 19,480 levels could now be considered as a new higher bottom of the sequence. A decisive move above 19,700 levels is likely to bring a sharp up move for the market towards 19,950-20,050 levels for the short term.
Immediate support is placed at 19,550 levels, said Nagaraj Shetti of HDFC Securities.
Nifty started to form a higher bottom and also breached the previous swing high confirming the reversal. The momentum indicator still has a negative crossover however it is likely to align with the price action soon, chart readers said.
What should traders do? Here’s what analysts said:
Jatin Gedia, Sharekhan by BNP Paribas
The pullback is likely to continue till 19,778 which is the 20-day moving average (19770).
Beyond that, it has the potential to stretch higher to 19,883, which is the 61.82% Fibonacci retracement level of the entire fall from 20,222 to 19,333. On the downside, the swing low of 19,480 is likely to act as a short-term support.
Rupak De, Senior Technical analyst at LKP Securities
On the hourly chart, Nifty has broken out of an inverted head and shoulders pattern.
In the short term, the index is expected to maintain its strength. A decisive move above 19,700 points could potentially propel the index towards the range of 19,850 to 19,900.
The support level is situated at 19,600.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
