NIFTY FUTURE 30 MIN / NIFTY FUTURE EOD
NIFTY FUTURE :
After a weak opening, Nifty Future went down to make a low of 4756 and bounced back sharply to the day's high of 4879. It closed the day at 4844. Though the fact that it did not break the previous low of 4718 is a big positive, two things are worth noting today - it has closed lower than Friday and has made a lower top / lower bottom. Both these negatives, take away my optimism that worst is over paricularly when we look at the long lower shadow to the day's candle. On the attached 30 min chart, I have made at attempt to show the reason for resistance at the day's high of 4879. Secondly, I have drawn an ellipse on the EOD chart, which can guide us with the probable support/resistance levels for the next few days. Plese do spare your time to see these charts.
For tomorrow, I would suggest fresh long positions only above 4880 (i.e. above today's high) with a stop loss of 4840. On the higher side, it will find strong resistance at 4925-4950 level. I doubt if this level will be crossed in a hurry and hence the breavehearts can go short around this level with suitable stop loss.
While one can consider going short below 4820 with stop loss of 4880, I do not advise this stratergy, as I prefer to buy when Nifty Future hits the support levels and sell at resistance level - mainly due to my postivie bias that Nifty Future is unlikely to go below 4680. In the event that happens, I would suggest buying with stop loss of 4640. Needless to mention that my optimism may not turn out to be true and hence caution is advised if you choose to go by it. Though the time value component of Oct series options remains high, I would advise buying options when Nifty Future hits the lower levels, indicated above.
Though not directly related, I would like to add here that, one need not get carried away by the up move in the US & European markets at the time of writing this post as any few % points rise in those markets still does not give much hope/enthusiasm of sustained rise any time soon. Simply put, those charts look pathetic.
With FNO settlement just a few days away, volatility can only increase and hence, please do not trade without STOP LOSS.
With Best Wishes,
Ketan Asher.
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