Relationship status: “Complicated”

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

2 thoughts on “Relationship status: “Complicated””

Leave a Reply

Your email address will not be published. Required fields are marked *