You are currently viewing Tech View: Nifty forms a hammer pattern on daily charts. What traders should do on Tuesday

Tech View: Nifty forms a hammer pattern on daily charts. What traders should do on Tuesday

Nifty today formed a bearish candle with long lower shadow, similar to a hammer candlestick pattern, on the daily scale. Chart readers said the pattern indicates that buying can be seen at support zones but absence of follow-up is resisting it at higher zones.

Now, it has to cross and hold above 17,071 zones to witness a bounce towards 17,171 and 17,250 zones, while on the downside supports are seen at 16,850 and 16,800 levels, said Chandan Taparia of Motilal Oswal.

India VIX was up by 8.38% from 14.77 to 16 levels. Volatility has been on the rise from the last three weeks, which is giving some discomfort to the bulls.

Option data suggests a broader trading range between 16,600 and 17,400 zones while an immediate trading range between 16,800 and 17,200 zones.

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

Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas

On the hourly charts we can observe that the momentum indicator has triggered a positive crossover, which is a buy signal. Thus, we expect the index to continue with a positive momentum, which started during the second half of today’s trading session for the next trading session as well. On the upside, the immediate hurdle stands at the 17,145 – 17,200 zone where the previous swing high is placed. The immediate support stands at the lower end of the downward sloping channel 16,800 – 16,850.

Rupak De, Senior Technical Analyst at LKP Securities
Nifty formed a hammer-like pattern on the daily chart, suggesting a reversal in the prevailing trend. On the daily chart, it fell below 16,950 only to close a bit higher. The momentum indicator remained in a bearish crossover with a reading below 40. On the hourly chart, the index has moved higher following a consolidation. The RSI on the smaller timeframe has entered a bullish crossover. On the higher end, the index may move up towards 17,250. On the lower end, closing basis support remains intact at 16,950.

Rahul Ghose, Founder & CEO – Hedged
Nifty has not yet closed below its weekly trend channel and is constantly forming candles with long bottom wicks suggesting exhaustion in selling and a technical pullback possibility. The highest Call writers for this week’s expiry is at the 17,200 level and the highest Put writers are seen at the 16,900 mark, which should be the range for tomorrow as well.

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

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