Tech View: Nifty forms hammer candle on daily chart. What traders should do on Tuesday

Tech View: Nifty forms hammer candle on daily chart. What traders should do on Tuesday

Nifty on Monday ended 203 points higher to end above the 22,000 mark for the first time and formed a hammer candlestick pattern on the daily chart.

On the derivative front, the 21,700PE strike added the highest open interest. With this, the supports are now dragged to the higher levels of 21,700-21,600 and sustenance above this zone on a closing basis will aid in garnering further bullish strength, StoxBox said.

The overall chart pattern, combined with positive market breadth and sectoral performance, indicates a favourable outlook for the Nifty, with the potential for further upward movement, chart readers said.

What should traders do? Here’s what analysts said:

Kunal Shah, senior technical & derivative analyst at LKP Securities

Nifty bulls maintained their momentum, propelling the index to new highs beyond the 22,000 mark. The major support for the index is situated at the 21,800 level, and a breach below this would be essential to negate the prevailing trend. The next immediate upside targets for the index are positioned at 22,200/22,300 levels. Sustaining above these levels could potentially lead the index towards the 22,500 mark.

Jatin Gedia, Sharekhan

In terms of levels, the short-term upside target for Nifty is placed at 22,350 – 22,500 where resistance in the form of the weekly upper Bollinger band is placed and 22,500 strike has the highest concentration of Open Interest on the Call side and hence can act as a resistance from a short term perspective. The overall trend continues to remain positive and dips towards the support zone of 21,900 – 21,850 should be used as a buying opportunity.

Ajit Mishra, SVP – technical research, Religare Broking

Nifty may take a breather around 22,150. However, the tone is likely to remain positive. We are closely eyeing the performance of banking majors for cues as others have done their part in the recent surge. A decisive break above 48,400 in the banking index could prompt the index to a newer high. Amid all, we thus suggest continuing with a “buy on dips” approach, with a focus on stock selection.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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