Tech View: Nifty forms small Hanging Man candle. What traders should do on Friday

Nifty ended the Thursday expiry higher by 203 points to close above the 50 and 20-day SMA (Simple Moving Average) and form a small Hanging Man pattern on the daily charts.

The formation of long lower shadows on two occasions in the last four sessions signals the emergence of sharp buying on dips. This is a positive indication and suggests more upside ahead. Immediate resistance of 22,300 (mid part of long bear weekly candle of last week) has been taken out on the upside on Thursday and the Nifty is expected to reach another resistance of around 22,600 levels (upper part of the last weekly candle) in the near term. Immediate support is at 22,280 levels, said Nagaraj Shetti, Senior Technical Research Analyst, HDFC Securities.

Analysis of Nifty put options shows a significant concentration of Open Interest (OI) at the 22,200 level, indicating robust support at this point. On the call side, there are notable OI concentrations at the 22,500 and 22,900 levels, suggesting these as resistance levels to watch, with the 22,900 level approaching all-time highs.

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

Rupak De, Senior Technical Analyst, LKP Securities

Finally, the index has moved back up into the rising channel after a few days of failed attempts. Over the next few days, the bulls might have the upper hand in the market as the index moved above the critical moving average after several days. On the higher side, the Nifty might move towards 22,600 in the short term. Support on the lower end remains at 22,250, the sentiment is expected to remain strong as long as it holds above this level.

Jatin Gedia, Sharekhan

On the daily charts, we can observe that Nifty has been in a pullback mode and now reached the 61.82% Fibonacci retracement level of 22,430. Nifty managed to close above the key daily moving averages which shall act as a support (22,330 – 22,270) in the case of a dip.

Daily and hourly momentum indicators triggered a positive crossover, a buy signal. Thus, both price and momentum indicators are suggesting continuation of the up-move. on the upside, 22,586 – 22,600 is the next crucial resistance to watch out for. On the downside, 22200 should be kept as a trailing stop-loss for the long positions.

Osho Krishan, Angel One

On the technical front, the 22,300 zone is likely to cushion upcoming blips, while 22,200-22,100 is likely to act as the next support zone for Nifty. On the higher end, 22,500-22,600 is very much in the vicinity of the bulls, especially with the kind of momentum seen in the weekly settlement session.

The only caveat here is we are in the midst of major general elections and hence, the volatility is likely to remain on the higher side. It’s advisable not to get gung ho on today’s development. Also, global development needs to be tracked closely and hence, the prudent strategy would be to take one step at a time for a while.

Shrikant Chouhan, Head Equity Research, Kotak Securities

We are of the view that a 50-day SMA or 22,310/73,500 would act as a sacrosanct support zone for the bulls. As long as the index is trading above the same, the bullish momentum is likely to continue. On the higher side, immediate resistance for the index could be 22,500-22,600/74,000-74,200. On the flip side, below 50 day SMA or 22,310/73,500 uptrend would be vulnerable. Below the same, traders may prefer to exit out from the trading long positions.

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

#Tech #View #Nifty #forms #small #Hanging #Man #candle #traders #Friday

Leave a Reply

Your email address will not be published. Required fields are marked *