Nifty on Monday hit a fresh new high to end 28 points higher just below the resistance at 21,000 level. The index traded in a 97-point range throughout the day and formed a high-wave type candle pattern.
The overall positive chart pattern of Nifty remains intact. There is a possibility of Nifty continuing its upward journey without showing any major breakdown in the near term. A decisive move above 21K mark could open the next upside target of 21,550. Immediate support is placed at 20,850 levels, said Nagaraj Shetti of HDFC Securities.
Looking at the Open Interest (OI) data, the highest OI on the call side was observed at 21,100, followed by 21,500 strike prices. On the put side, the highest OI is at the 20,900 strike price.
What should traders do? Here’s what analysts said:
Ruchit Jain, Lead Research, 5paisa.com
Now, although the momentum readings are overbought, there are no signs of reversal yet and thus traders should continue to trade in the direction of the trend till the supports are intact. The immediate supports for Nifty are placed around 20,900 and 20,800 while resistance is seen around 21,080 as per the retracement theory. While the index could consolidate within this range, short-term traders can trade with a stock-specific approach as the market breadth is more in favour of advances. Only a break below 20,800 could then apply some brakes to the ongoing rally and lead to some pullback move. Thus traders should keep a close watch on the given levels and manage positions accordingly.
Rupak De, Senior Technical analyst at LKP Securities
There’s a strong resistance at 21,000, with call writers actively building positions. A decisive breakthrough above 21,000 is necessary to resume the uptrend. Until then, it’s anticipated that the market will consolidate within a broader range.
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