Tech View: Nifty delivers tall bearish candle. What should traders do on Tuesday

Besides forming lower highs and lower lows on the hourly charts, Nifty today formed a tall bearish candle on the daily charts as it revisited mid-October levels.

Now, till it remains below 17250 zones, weakness could continue towards the next psychological support of 17000-16800 levels, while on the upside hurdles are seen at 17350 and 17442 levels, said Chandan Taparia of Motilal Oswal.

Options data suggests a broader trading range between 16800 to 17700 zones, while an immediate trading range between 17000 to 17500 zones.

Nifty is now trading below all its important averages, and the slope of the average has tilted lower. Prices on the daily chart are trading within the falling channel pattern and have to find the overhead resistance near the upper band of the pattern, chart readers said.

What should traders do? Here’s what analysts said:

Rahul Ghose, Founder & CEO, Hedged
There was a huge shorting of calls seen at the 17300, 17400, and 17500 levels, with the highest OI at the 17500 CE level. In fact, the total OI of sold calls is more than double that of sold put options currently. However, it is not advisable to initiate vanilla short positions on the index immediately as the risk-reward is not in favour.

If someone wants to still play for the downside, they should initiate cross-calendar spreads on a bounce in Nifty with the 17000 and 16900 strikes of April-end and April 6, 2023, respectively. This will ensure that both a sideways or downside movement in Nifty is taken care of.

Ajit Mishra, VP - Technical Research, Religare Broking
The move shows that participants are not comfortable, citing the US banking crisis and reducing positions, ignoring the news of the bailout. Banking and financials were acting as saviors earlier, but the tone has changed completely now, further adding to their worries. We reiterate our negative view and eyeing the 17,000 level as immediate support in Nifty. Traders should align their positions accordingly.

Rohan Patil, Technical Analyst, SAMCO Securities
The support for the Nifty is at around 17,050 – 17,000 levels, and resistance is capped at 17,500 – 17,550 levels. In case the index breaches below 17,000 levels then 16,800 will be the next support zone. A strong break above 117,550 will indicate a strength to move higher.

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