Tech View: Nifty forms a morning star like pattern. What traders should do on Wednesday

The headline index formed a morning star like pattern on the daily chart as it found buyers near the 20-day EMA at 18662 levels and bounced to form a higher bottom, and that will act as a strong support going forward, chartists said.

The daily and hourly momentum indicator gave divergent signals. Heavy put writing additions were seen at 18,700 strike, making it a strong support for Nifty as we head into the final day of the June series expiry on Wednesday. Option activity at 18,800 strike will provide cues about Nifty Intraday direction on Wednesday, said Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities.

On its monthly expiry day, FinNifty registered a new all-time high of 19,809 on Tuesday.

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

Rahul K Ghose, Founder & CEO, Hedged
Put writing for both Wednesday’s expiry and the July expiry saw significant OI build up. The 18900 and 19000 puts as well saw build up indicating that the all-time high level could be achieved this week itself. What is more important to note is that, Bank Nifty also saw participation in this move to the upside and saw equally large put writing. The level to watch for a closing on the Bank Nifty index is 44200. We need a bullish candle closing above this for the rally to sustain.

Jatin Gedia, Technical Research Analyst, Sharekhan
Bulls have managed to defend the average support, which is a sign of strength. In terms of levels, 18650 – 18600 shall act as a crucial support zone while 18880 – 18900 shall act as a crucial resistance zone.Osho Krishan, Sr. Analyst, Technical & Derivative Research, Angel One
Technically, the index is poised to test the 18888 level on the expiry day and strong thumbs-up coming from the BFSI space could provide the much-needed thrust to push sentiments. As far as levels are concerned, a decisive closure above the ATH could open gates for the 19000 mark for Nifty. While on the flip side, 18750-18700 is likely to cushion any sort of blip, with sacrosanct support present at the 18650 zone.

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