Trade setup for Tuesday: Top 10 things you should know before Opening Bell

The 50-share NSE Nifty, which started on a buoyant note on Monday, reclaimed the 10,300 level in the opening tick but failed to build on the momentum, witnessing wild swings on either side.

The Nifty made a bullish candle that looked like a ‘Hanging Man’ kind of pattern. The index has been making higher highs and higher lows over the last three trading sessions.

A Hanging Man is a bearish reversal candlestick pattern, which is usually formed at the end of an uptrend or at the top. In a perfect 'Hanging Man' pattern, there will either be a small upper shadow or no upper shadow at all, a small body and long lower shadow.

The Nifty50, which opened at 10,310.50, rose to an intraday high of 10,329, which made a small upper shadow, but bears quickly took control and pushed the index towards 10,282, which made a long lower shadow on the daily charts.

The bulls took control and pulled the index back above 10,300 towards the closing trade. The Nifty50 finally ended 56 points higher at 10,322 on Monday.

The index is likely to face some resistance around the 10,350-10365 level. Investors are advised to pare their leverage bets and build long positions only when Nifty closes comfortably above 10,350-10,365 levels on closing basis.

"The Nifty index continued its up move for the third consecutive session and is now headed towards 10,330 zone. It made a Bullish candle on the Daily chart and closed with the gains of around 55 points," Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

Taparia said that the index has to continue to hold above 10,250 zone to extend its up move towards 10,409, then 10,490 levels, while on the downside, supports are seen at 10,178 then 10,150.

The Nifty closed at 10,322.25 on Monday. According to Pivot charts, the key support level is placed at 10,293.07, followed by 10,263.93. If the index starts to move higher, key resistance levels to watch out are 10,340.27 and 10,358.33.

The Nifty Bank closed at 25,404.85, up 0.33 percent. Important Pivot level, which will act as crucial support for the index, is placed at 25,332.73, followed by 25,260.66. On the upside, key resistance levels are 25,462.83, followed by 25,520.87.

Maximum Call open interest (OI) of 53.26 lakh contracts stands at strike price 10,500, which will act as a crucial resistance level for the index in the December series; followed by 10,400, which now holds 42.39 lakh contracts in open interest, and 10,600, which has accumulated 36.57 lakh contracts in OI.

Call writing was seen at strike prices of 10,700 (2.6 lakh contracts were added), followed by 10,600 (where added 1.15 lakh contracts).

Call unwinding was seen at strike price 10,300, which shed 6.82 lakh contracts; followed by 10,500, which saw shedding of 2.99 lakh contracts and 10,200, which shed 2.22 lakh contracts.

Maximum put OI of 85.47 lakh contracts was seen at strike price 10,000, which will act as a crucial base for the index in December series; followed by 10,100, which now holds 48.56 lakh contracts and 9,800 which has now accumulated 48.21 lakh contracts in open interest.

Put writing was seen at strike prices 10,100 (8.49 lakh contracts added) and 10,300, which saw the addition of 5.40 lakh contracts and 10,200, which saw the addition of 1.31 lakh contracts.

Put unwinding was seen at strike price of 9,800, which shed 1.65 lakh contracts; followed by 10,000, which saw shedding of 1.35 lakh contracts and 10,500, which shed 1.14 lakh contracts.

Foreign institutional investors (FIIs) sold shares worth Rs 185.6 crore, while domestic institutional investors bought shares worth Rs 108.94 crore in the Indian equity market on Monday, as per provisional data available on the NSE.

High delivery percentage suggests that investors are accepting the delivery of the stock, which means that investors are bullish on the stock.

A decrease in open interest along with an increase in price mostly indicates short covering.

An increase in open interest along with a decrease in price mostly indicates short positions being built up.

Long unwinding happens when there is a decrease in OI as well as in price.