NIFTY FUTURE 30 MIN / NIFTY FUTURE EOD
NIFTY FUTURE :
In today's trading, Nifty Future opened weak and maintained downward bias for better part of the day and made a low of 5632 (just 3 points above the previous low of 5629) and thereafter made a sharp up move to make the day's high of 5744. However, we have still ended up with lower bottom/lower top for the day - which indicates weakness. The up move could be more of a result of sudden rush to cover shorts, as Nifty Future did not break the previous low of 5629. The brighter side of day's low is, that unless 5629 is broken, we have to consider this as a double bottom and hence sell should now be considered only below 5629. We have had Nifty Future bouncing from 200 DMA twice in this week. Will we be lucky the third time? Read on...
Interestingly, on the EOD chart we now have formation of flag like pattern, which when broken below 5629, indicates a fall of 200 points. The pattern gets cancelled if Nifty Future starts moving above this weeks' high of 5754.
In these circumstances, trying to predict the next day's movement is a bit difficult and trading becomes all the more. The best way in these circumstances is to let the market make the first move and keep our trading levels a bit far so that whipsaws can be avoided - like today.
For tomorrow, I would suggest that long positions should be taken only above 5770 (see the Trend Line hurdle) with stop loss of 5735. On the higher side, it will face major hurdle at 5800, hence in my view - it is best to avoid taking long positions at least for tomorrow unless one wants to trade for these 30 odd points.
In view of the double bottom, it is better to go short below 5625 with a stop loss of 5665. On the down side, we have support at 5545 and 5515. As this levels looks too late, one can even consider going short below 5690 (refer weekly mid point in TP Grid) with stop loss of 5725. Once again on the down side, we have to consider 5629 as a possible support level, unless it is broken. Those with aggressive approach can go short at the first sign of weakness around 5800 level (if it materialises) with stop loss of 5855.
In view of the above contradictions, be prepared for a volatile day - that too last day of the week.
Put Call Ratio of Index Options decreased significantly to 0.82 as against 1.01 yesterday. If you believe that collective wisdom is wrong be prepared for market heading for break of 200 DMA.
Whatever may be your view, please do not forget to put the STOP LOSS.
With Best Wishes,
Ketan Asher.
PS: With US & European markets down, our bias has to be for the down side.
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