Technically, this pattern indicates an attempt of upside breakout of the previous down gap resistance of 2nd August around 24,950-25,000 levels.
Hence, the two important down gaps of 2nd and 5th August have been filled completely around 24,950 and 24,680, respectively. This is a positive indication, Nagaraj Shetti of HDFC Securities said.
Open Interest (OI) data showed that on the call side, the highest OI was observed at 25,200 and 25,500 strike prices, while on the put side, the highest OI was at 24,800 strike price.
What should traders do? Here’s what analysts said:
Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas
On the daily charts, we can observe that Nifty has filled the gap area formed on August 2, and is inching higher. The previous all-time high of 25,078 and above that the rally is likely to extend towards 25,220, which is the daily upper Bollinger band. On the downside, 24,600, which is around the 20-day moving average, shall act as a trend reversal level from a short-term perspective.
Hrishikesh Yedve, Asit C. Mehta Investment Interrmediates
Technically, the index has crossed the gap hurdle of 24,960, formed a big green candle, and closed above the 25,000 level for the first time. Nifty’s previous all-time high is near 25,080 levels, which will act as an immediate hurdle in the short term.
If the index sustains above the 25,080-25,100 levels, the rally could extend towards the 25,300-25,500 levels. On the downside, the 9-Day Exponential Moving Average (DEMA), positioned near 24,700, will act as immediate support for the Nifty in the short term. As long as the index holds above 24,700, a “buy on dips” strategy should be employed.
Tejas Shah, Technical Research, JM Financial & BlinkX
The bulls are in full control of the markets at the current juncture and are using every intraday correction to create long positions. The short-term moving averages are just below the price action and should continue to support the indices on every decline. Support for the Nifty is now seen at 24,850 and 24,650 levels.
On the higher side, the immediate resistance for Nifty is at 25,078 level (Previous ATH) and the next resistance is at 25,200 mark. Overall, the bulls should continue to have the upper hand going forward.
Rupak De, LKP Securities
Nifty remained strong throughout the day. On the daily chart, a visible green candle has formed after two consecutive negligible red candles, suggesting improving sentiment.
However, resistance is evident at 25,080, and a decisive move is needed to witness a rise toward 25,300. On the other hand, failure to move above 25,080 might trigger selling in the market, potentially bringing the index back toward 24,800.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)