Tech View: Nifty is showing signs of a bounce back, in the process of forming a double bottom. How to trade tomorrow

A long bull candle was formed on the daily chart, indicating that the market is on the verge of showing an uptrend. It was seen that the Nifty is in the process of forming a double bottom type pattern around the 24,700 level, which needs to be confirmed with further upside. The index closed below its 50-DEMA, though showing a good recovery.

Tuesday’s upmove could be a motivating factor for the Bulls’ comeback. A more sustained upside from here could confirm a near-term bottom reversal pattern. A decisive move above the 25,000 level could open the next upside resistance at 25,400-25,500 in the near term. Nagaraj Shetty of HDFC Securities said the immediate support is 24,700.

In open interest (OI) data, the highest OI on the call side was seen at 25,000 and 25,200 strike prices, while on the put side, the highest OI was seen at 25,000 strike price followed by 24,800.

What should traders do? Here’s what analysts had to say:

Hrishikesh Yedve, Asit C. Mehta Investment Intermediates

Technically, on the daily chart, the index formed an insider bar candlestick near the short-term trend line support and previous demand zone. Thus, levels of 25,150-25,350 are possible as long as the index remains above the lows of 24,690. Investors should adopt “buy on dips” strategy in Nifty index for short term.

Rupak De, LKP Securities

The Nifty has formed a bullish Harami pattern on the daily timeframe, indicating rising optimism. Furthermore, the index has moved above the crucial moving average on the hourly time frame. The RSI has formed a bullish crossover in the short-term, further supporting the positive outlook. In the near term, the index may move towards the 25,350-25,400 range. On the downside, support is placed at 24,850, and a break below this level could lead to weakness.

Praveen Dwarkanath, Hedged.in

Nifty has seen a dead cat bounce which was expected from its low of 24800. However, it is yet to close above the previous day’s high, indicating continued weakness. Momentum indicators have recovered from oversold territory, however, the ADX average line still shows weakness to continue. One can take a more bullish view on Nifty only if it closes above 25300, till then the index can be sold. Options Writer’s data showed a significant increase in call writing at the 25000 level, indicating continued weakness in the index despite the bounce.

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