Positive chart patterns like higher highs and lows are observed on the daily chart and the market is displaying a strong upside momentum without showing any reasonable downward correction in between.
The underlying trend of Nifty remains positive. Having reached an upside target of 26,250 levels (1.618% Fibonacci Extension) on Thursday, the Nifty could now move up towards another upside level of 26,900 (1.786% Fibonacci Extension) by the next couple of weeks. Immediate support is at 26,000, said Nagaraj Shetti of HDFC Securities.
In the open interest (OI) data, the highest OI on the call side was observed at 26,250 and 26,300 strike prices, while on the put side, the highest OI was at 26.200 strike price followed by 26,100.
What should traders do? Here’s what analysts said:
Jatin Gedia, Sharekhan
A late surge helped the Nifty close in the green, up by 182 points. On the daily charts we can observe that the Nifty is heading towards the upper end of the rising channel 26,560. Divergence on the momentum indicator suggests that caution should be maintained on the longs. Until there is evidence of weakness on the price front, we shall continue to ride the uptrend with a trailing stop-loss mechanism which should be maintained with 26,000.
Praveen Dwarakanath, Hedged.in
Nifty has given a breakout above the psychological level of 26,000 and is also walking on the Upper Bollinger band, a strong sign of bullishness. Thursday’s upside move can also be due to the short covering in the sold calls of Thursday’s expiry. The options writer’s data for October’s expiry shows increased put writing at 26,000 levels, indicating a further rally from the current levels. Immediate support for Nifty is now at 26,000 levels, while Nifty can test 26,500 levels soon.
Hrishikesh Yedve, Asit C. Mehta Investment Interrmediate
Technically, the index has given a fresh breakout to the rising channel pattern around 26,000 and managed to sustain above the 26,200 threshold. As long as Nifty sustains above the breakout level of 26,000 a “buy on dips” strategy should be adopted for Nifty. Previously, Nifty had also given a breakout to a short-term rising wedge pattern. According to that rising wedge pattern breakout the index could test the level of 26,500 and 26,800 in short to medium term. On the downside, the psychological level of 26,000 will serve as an immediate support for the index.
Rupak De, LKP Securities
The Nifty has broken out of consolidation on the daily timeframe, indicating increasing bullish momentum. The sentiment is expected to stay positive as the index closed above a key moving average. A drop below 26,000 might disrupt the current bullish trend, but until then, the strength is likely to persist in the index.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
