Tech View: Short covering rally takes Nifty beyond 24K. Here’s how to trade on Friday

After forming fourth successive bull candles on the daily chart, Nifty ended June derivative series above the 24,000-mark for the first time ever amid short covering.

The underlying trend of Nifty continues to be positive. A sustainable move above 24000-24100 levels could pull Nifty towards another Fibonacci extension resistance of around 24380-24400 levels in the near term. Immediate support is placed at 23800 levels, said Nagaraj Shetti of HDFC Securities.

Open Interest (OI) data showed on the call side, the highest OI was observed at the 24,500 and 25,000 strike prices. On the put side, the highest OI was at the 23,800 strike price.

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

Rupak De, LKP Securities

Nifty continued moving up as the bulls took the index to a new all-time high. The index made new all-time highs for the last three consecutive sessions, showing signs of resilience amid global sluggishness. The trend remains positive for the short term or until it breaks below 23,800. On the higher end, the index might move towards 24,200.

Tejas Shah, JM Financial & BlinkX

Some technical indicators are in overbought territory on the short term charts i.e. hourly charts that could lead to knee-jerk reactions, from time to time. The short term moving averages are below the price action and should continue to support the indices on any decline. Support for the Nifty is now seen at 24,000 and 23,750-800 levels. On the higher side, immediate resistance for Nifty is at 24,125 level and the next resistance is at 24,300 level. Overall, Nifty is likely to remain volatile within the 23,800 – 24,300 range in the near term with a positive bias.

Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas

On the daily charts, we can observe that Nifty has witnessed a perpendicular rally in the last four trading sessions. Today the IT Index was one of the major contributors which helped Nifty to close above 24,000. The immediate hurdle on the upside is placed at 24,150 – 24,200. Trailing stop loss for the longs should be kept at 23,800. Divergence is visible on the hourly charts and the market breadth has been deteriorating since the last three trading sessions hence caution is advised.

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