Nifty managed to close above 9500 for the second day which made some traders over confidence for some more long trades…but STAY CAUTIOUS! In my last post (Range volatility expected but find sector specific moves) i mentioned to WRITE 9200 PE and 9500 CE , surely you might be in loss for M2M in CE writing but wait. Open interest data is still suggesting a strong resistance at 9500.
To support our profit booking view for near term on Nifty, today on daily chart we have got a Doji candle which is a sign of pause to current trend. It has got more significance today as it is at the high of current trend and also indicators are in overbought position. So what could confirm its role of reversal???…”Candle Tomorrow” ! Watch out for Opening of Nifty, if its below 9517 and we dont pinch a new high, there are 70% chances that we could get a reversal sign on close tomorrow. May be i would consider last two sessions close as a false breakout for short term traders.
On other side if we look at global markets, they are already showing signs of weakness since last two sessions and also bullion markets are in strong short covering move which is a sign of Equity market reversal. So strategy would remain the same on Markets as last post: writing calls on Nifty and going short on Nifty Bank!
Happy summer trading with strict stoploss!