Tech View: Nifty takes a breather with small negative candle, bullish view intact. How to trade on Monday

On the weekly chart, it formed a long bull candle, the third consecutive candle in a row. Technically, this weekly market action is indicating a bullish ‘three advancing soldiers’ type pattern signalling continuation of uptrend.

The near-term uptrend of the market remains intact wherein Nifty could eventually bounce after the consolidation in the next few sessions. The immediate support is at 25,900, said Nagaraj Shetti of HDFC Securities.

In the open interest (OI) data, the highest OI on the call side was observed at 26,200 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:

Hrishikesh Yedve, Asit C Mehta Investment InterrmediatesTechnically, the index on a daily scale has formed a small red candle and on a weekly scale index has formed a big green candle. Moreover, on a weekly scale it has managed to close above the breakout of the rising channel pattern, indicating strength. In the short term, as long as, Nifty holds above the breakout level of 26,000 a “buy on dips” strategy should be adopted. On the upside, 26,500 will be an immediate short-term target for the index.

Rupak De, LKP Securities

The Nifty took a breather after a few days of continuous gains. The sentiment remains strong as the index continues to stay above important moving averages. This strength is likely to persist as long as it remains above 25,900. On the higher end, a fresh round of rally may begin above 26,300. If the Nifty moves above 26,300, it could potentially rise towards 26,600.

Praveen Dwarakanath, Hedged.in

Nifty has consolidated at the 26,200 level, signifying the breakout is still valid unless the 26,000 crucial support is not removed. ADX DI+ line is showing a reversal, a sign of slowness in the rally. The stochastics show signs of negative divergence, however yet to be established, making the view still on the upside for the next target of 26,500 levels in the index. The Options writer’s data for October’s expiry shows increased put writing and short covering in the ITM and OTM calls (25900, 26000, 26500), showing signs of a continuation of the present rally.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)