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Trade setup for Tuesday: Top 15 things to know before Opening Bell

The texture of charts clearly shows that the short-term trend is still up but a strong possibility of intraday correction cannot be ruled out if the index trades below 11,450, says Shrikant Chouhan of Kotak Securities.

October 06, 2020 / 07:14 AM IST

The market gained for the third consecutive session on October 5, though it was a volatile day as the Supreme Court deferred its decision on the moratorium interest waiver case. The recovery in US President Donald Trump's health after testing COVID-19 positive and rally in IT stocks after TCS' share buyback plan aided sentiment.

The BSE Sensex was up 276.65 points to close at 38,973.70, while the Nifty50 climbed 86.40 points to 11,503.40 and formed a small-bodied bullish candle which resembles a Shooting Star kind of pattern on the daily charts.

"A small positive candle was formed with gap up opening and with long upper and lower shadow. This pattern indicates a formation of a high wave-type candle pattern at these highs. Normally, a formation of high wave after a reasonable rise could signal a confused state of mind among participants, and some times, it acts as a reversal pattern, after the confirmation. The opening upside gap of Monday, which was a second back-to-back gap remained unfilled," Nagaraj Shetti, Technical Research Analyst at HDFC Securities told Moneycontrol.

"Nifty is currently closed just above the resistance of down sloping trend line at 11,500 (taken from the swing high of 11,794 and connected lower high) and we observe intraday strength in the market around the hurdle. Hence, one may expect a further attempt of upside breakout of 11,550-11,600 levels in the coming sessions," he said.