SENSEX : SENSEX responded to the HAMMER candle pattern very well and has given a smart follow up as it has closed above 16368.
Watch 16663 as this is 61.8% retracement level of the last leg of fall and even if the up side is to continue SENSEX may pause its up side here.
The opening GAP between 16209 and 16282 now becomes a crucial support and although there is a possible double bottom around 15800 a close below this GAPPED area will end any bullish hopes.
Also we will need a few other evidences like an ADX rising up above 30 for the up side momentum to pick up as on date ADX is below 24.
NIFTY : for NIFTY too there is a nice follow up after the HAMMER candle pattern as it has given a good close above 4931 which was earlier RESISTANCE level.
Yesterdays gap between 4878-4905 will be an important support and for the up side to continue through October 2011 NIFTY must not close below 4878.
For the up side 5013 is the 61.8% retracement level which will act as a resistance.
We will have to watch if NIFTY closes above 5013 and traders need to be very cautious as tomorrow will be the last day of current settlement.