NIFTY FUTURE WEEKLY
During the week goneby, Nifty Future saw an above average range of 355 points (High of 5174 and Low of 4819). This week has once again shown us that 5200 level acts as a strong resistance area.
With last weeks' double top at 5174 and subsequent fall of nearly 300 points on Nifty Future, we are once again at the threshold of touching/pierecing the previous low of 4700. As shown on the attached chart, 4600 level should provide a good support area in view of the trend line (in magenta).
In view of the FNO settlement on Thursday, I would consider that Nifty Future may just go little below 4700 (my level 4680) and bounce back. I would recommend delivery based buying when Nifty Future hits the 4700 level. After all, we still have to see Nifty Future filling up the 5300 gap area and more importantly as per the Monthly chart we have Oct 2011 which should be of significant importance for an important bottom for the time being.
Though I am expecting a bounce from 4700 level, I would not recommend buying calls for Oct series in the next week, as high volatility has increased the premiums and particularly the time value element is quite high. It may be prudent to see at what level Nifty Future takes support next week and consider buying the Calls for Oct series in the following week.
Have a nice weekend!
Ketan Asher.
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