TARGETS ACHIEVED: 7265 and 7350
Today it was Diwali day for traders as “stocks rocket ho gaye”. Nifty after many months gave a strong gap up of more than 90 points. Advance/Decline ratio was almost 9:1 and it was one of the best in recent times. Nifty finally closed on my upside target 7350 which i mentioned two days back at Relationship status: “Complicated” . But interestingly Nifty has also closed over my both resistance levels 7265 n 7363 which i mentioned yesterday in Nifty approaching upside target . So now the medium term outlook is surely changed to a rally but its could be just a short covering rally also. Confirmation can only above 8200. As a investor and trader we shouldnt wait for the confirmation level and atleast take this rally as a opportunity to cover losses which we made during high volatility in last two expiry. So now we should be biased on the long trades and my near term target is 7440
Net Payout on premium buy buying 7050 CE and 6900 PE was 239. Today we closed 7050 CE at Rs.360. So if you guys booked profit on this call you net profit is: 360-239=Rs.121/Lot.
And now we are still holding 6900 PE whose cost is Nil now as we have already booked profit on the strategy. So to be on safer side Hold 6900 PE.
Buy 7400 CE and Sell 7600 CE= Net Payout is 48.95-123.80= 74.85
So my cost of strategy is 74.85/lot
We recommend to book profit on 7400 CE on my target 7440.
For any queries feel free to contact me by replying to this post.
Finally we saw some strong move on Nifty after many sessions but yet its not that convincing for a reversal for a long term horizon. As Dow Theory suggest that unless we get a clear reversal signal, we should believe that the existing trend is intact. So i am still not fully convinced for a upside reversal. As we could notice that Nifty is approaching a chaos area of many resistances, it makes me to take some profits on the trading position for the longs. Lets take resistances one by one….Firstly 7265, which is a channel line resistance. Second resistance is at 7350 which is a fibonacci resistance and thirdly, 7363 which is the unfilled gap. So guys we need to be a lil cautious but it doesnt mean we should skip trading. My view on the Nifty is intact as i mentioned yesterday with Upside target of 7350. Stay hedged!!!!
Last week we saw that Nifty kissed support at 6960 and the relationship was upto that kiss only for the last week. But today it got more complicated between supports and Nifty. Today it went more than a kiss below 6960 and it felt that relationship would go much beyond, but they fell apart and couldnt sustain for a day too! Nifty managed to close above support level of 6960 but it has left relationship status too: “Complicated” after its behavior in intraday. Its getting more difficult to take some call on the Daily charts so have considered Weekly charts for my analysis today. As you all could noticed in the attached chart, Nifty has taken back support of 200 Weekly average at around 6870 (yellow line), but still the week is left and anything could happen. On the second point of support, Nifty has closed exactly at the downside channel line support which is crucial as the channel is intact since the high last year. So now all eyes is surely on weekly close. BUT i could support a probable crossover on weekly chart which i have circled on the top. That are 50 and 100 weekly averages and its about to give a bearish crossover, and this could be for a pretty much long time. So we need to surely lookout for it through the week. So what next if we close below 6960? Then, we could surely see 6640 as i have circled red on the charts. 6640 has got more importance as its a Fibonacci support of rally from 5118-9119 and it is also coinciding with white trend line, which is intact since the low of 2252 in 2008. So, to sum up, Nifty is still in a complicated status and 6650 seems to be coming while on upside 7150 is strong resistance. So may be need to stay cautious through this week on Index
Recommended Strategy for investor is Long Strangle: Buy 7050 CE Nifty and Buy 6900 PE Nifty
Cost and profit of strategy:
Premium of 7050 CE is 130 + Premium on 6900 PE is 109.80 = Premium payout of 239.80
Upside target: 7350 for the series: Profit( 7350-7050)= 300 Points- Cost 239.80 = Rs. 60
Downside target: 6600 for the series: Profit (6900-6600)=300 points-Cost 239.80= Rs.60
So if you are a investor, you can surely hedge your portfolio with this Strangle.
While risk takers can surely wait for either level and than take a long or short call on Nifty with a future
Technically today was a good day on Nifty daily charts but the weekly closing hasnt been that significant for either side move. So we have to stick to daily chart analysis to get some clear trend. As we saw yesterday, that low was exactly kissed at the strong support of 6960 which was previous weeks low and also the Fibonacci support so it holds alot significance. Today it was trading way above that support but closing has brought me some fear for bulls back. Now the question remains that was yesterdays low to support just one kiss or we can see it again? Though its just a fear which can be controlled. Monday’s opening would decide whether Nifty charts have overcame fear or not? Whats the fear? ….Doji candle on closing today! It has peculiar characteristics of being a a part of reversal pattern and also a continuation candle signalling just a pause to current trend. Only Mondays opening could tell us what exactly todays Doji signifies!! What should we keep in mind? 1. If we have even a marginal negative opening and if we dont breach todays high, then Doji would take a bearish view. 2. If at any point of time we breach todays high, Doji could be considered just a pause to upside and rally should resume. Though these are the basic possibilities, but a significant one. Though its a Budget day so we should keep positions hedged either ways
Nifty expiry has been the worst this year as it has closed below 7000 level which was last resort psychological level for traders. As i mentioned yesterday that a trade below 6960 would activate 6609, today nifty made low exactly at 6961 which can be termed as ‘kissing support”for the downside breakout. As you all could notice in the charts, Nifty has taken support exactly retrenchment level which completes a “Regular flat” of second wave of the recently started rally from 6869. But if at all we close below 6960 tomorrow, then we have to reverse the chart and consider this as Motive wave for the downside. Currently, it seems we should reverse looking at the support from European markets, but you never know what they will end at night. So Wait and watch for tomorrow closing!!
Nifty has finally given a breakout of a wedge on the downside and have seen a close below the same which has meant a bearish mood on the markets for coming days. Though yet we need confirmation for the pattern breakout with 2 more close, we can stay cautious for the long positions. Today after the close, i have tried to mark Nifty into the red channel, suggesting that we could see 6690 levels if we didnt recovered in next two days and closed above 7200. Technically, on weekly chart we need to trade below 6960 which is previous weeks low to get confirm bears party. So tomorrow being expiry, we can expect a volatile session and Friday can be a crucial close again. So may be we could still avoid trades for next two days and wait for a confirmation weekly close.
So crucial levels for on Nifty remains 6960: Previous weeks close, 6869: 200Weeks average and for the upside anything above 7180 is safe. So just wait and watch!!
Where it was expected that we shall just cross over the bridge of Expiry safely and without volatility, all of a sudden we got a big speed breaker where almost everyone touched its SL. Though yet road hasnt changed for the Nifty’s move, but it has surely gave a sudden jerk which has given a small injury to profits. As you all could notice in the attached graph, we are back on the support line which has been tested for the third time in recent past. A triangle pattern which was expected to be intact, has proved to be false breakout and after redrawing the patter, a Wedge could be marked out which could be brutal on breakout on either side. So again its time be cautious. And tomorrow we could have another volatile session. So after triggering SL of 7180 on my yesterday’s call, i recommend to wait till tomorrows close!!! Safe traders stay away from the road.
Since many months traders havent made money on either side because volatility has been unpredictable. But since last few sessions, Nifty seems to be giving some signs of clear trend in near future. As i had mentioned before, 6869 support had been crucial as it was on 200 week average and also a support level based on Elliot wave. Now a bounce back is sure but whether this a relief rally or start of new rally, that we shall get a confirmation only when we close above 7500. But till then, for time being we have got a small confirmation for a rally on daily charts. As you all could notice on the attached chart, blue line outlines a ascending triangle and it has given a breakout at 7204 with a small target of 7460. But for this weekly target we can assume it to be at 7363 where we have untouched gap and also a small resistance line. So for time being stay long on Nifty with tgts of 7363/7460 and stop loss of 7180.
Nifty had shown some high volatile characteristics last week but yesterday finally it did manage to close over 7205 which was acting as strong resistance throughout the week. Daily charts have seen a reversal confirmation BUT weekly charts havent given any strong chart pattern or candlestick pattern to show reversal except sustain 200 Weekly average at 6869. I have also redrawn channel from the highs indicating last one year between the same by index. I believe we should trade between this channel for some more time. But if we witness this channel breaking support than we could achieve retrenchment level of 61.8% of long term rally which is at 6680 but thats too early to say. Looking at the derivative data it suggest that base for this expiry is formed at 7100 while 7350-7400 is the resistance range where we could see Nifty expiring. So now next week remains crucial and we wish that we can get some confirmation on weekly charts next week. For now risky traders stay long on stock specific!!
Nifty chart has been pretty confusing these days and today we have added one more day to confusion. As we all can notice in the chart we have got another “Doji” type candle which is indecisive in nature. If we analyse Nifty from different angle’s then its getting more and more confusing. Candle stick patterns have failed and today we have got a Doji at resistance line of 7204. Though it is the level near to a strong breakout but volumes today is not supporting my view for the long breakout. But if we look at indicators, below in the chart, they have given bullish crossover with their Moving average. Secondly, derivative data is suggesting 7000-7100 as strong base for next week as much writing on PUT was witnessed. Thirdly, global markets have given bullish breakouts from the consolidation which means that Nifty should compile with their trend. So overall charts are confusing but biased towards long. Crucial levels for tomorrow at 7204 on upside. While for downside there is not specific level, but shorts would get stronger if the open is below 7127. So safe traders avoid markets, risk takers stay long but keep sl of 7100 the opening is gap down.