Nifty on Tuesday ended 27 points higher to form a small positive candle on the daily chart while consolidating in a range between 22,400-22,600 levels.
The index continues to hold above the 20 and 50-day SMA, which is a positive signal. The 14-day RSI at 56.38 is rising and not overbought, which is encouraging. The uptrend is likely to resume once the 22,600 resistance levels are taken out. Crucial support is now at 22404, said Subash Gangadharan of HDFC Securities.
An analysis of Nifty put options reveals a concentration of Open Interest (OI) at the 22,400 level, implying potential support at this level. On the Call side, significant OI concentrations are observed at 23,000 and 23,200 levels, nearing all-time highs.
What should traders do? Here’s what analysts said:
The index remained within the range of 22,400 and 22,600. Strong put writing at 22,400 and 22,500 might provide support to the Nifty. On the higher end, a decisive move above 22,600 might induce a rally towards 22,800 in the near term. Till then the index might continue consolidating as long as it remains within the range of 22,400 to 22,600.The important key takeaway from the Nifty chart is that it is making a higher high both on the daily and weekly charts. We believe that as long as Nifty is holding above 22,200 Mark, the rally in Nifty is likely to continue and it can test the next resistance level of 22,600 on an immediate basis and eventually it can retest the previous all-time high levels of 22,800 on the higher side. Support for the Nifty is now seen at 22,400 and 22,250 levels. On the higher side, immediate resistance for Nifty is at 22,600 levels and the next crucial resistance zone is at 22,750-800 levels (Previous ATH). Overall, till this higher high syndrome continues one should not fight the trend.On the daily charts, we can observe that Nifty has been in the recovery process after testing the lower end of the rising channel. It has now reached the 22,570 – 22,600 zone where resistance in the form of 78.6% Fibonacci retracement level is placed. The hourly momentum indicator has triggered a negative crossover, which indicates that the Nifty is likely to consolidate. Considering that prices have reached a crucial level and there is a loss of momentum on the hourly timeframe we can expect the Nifty to consolidate over the next few trading sessions. We should keep a stop loss of 22400 for the 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)
