NIFTY FUTURE 30 MIN / NIFTY FUTURE EOD
NIFTY FUTURE:
And finally Nifty Future filled the gap at 5192 on Friday and closed the week at 5194 after making an intraday low of 5161 and high of 5216. As expected, the impact of downfall in World markets did get diluted because of market holiday for us on Thursday. The candle for the day is a doji with day's down side gap remianing unfilled.
The important part of last weeks' fall, post the breakout from 5200 levels is that it has filled the gap Now its important to know whether it will resume the up move or once again continue the down move? The answer to this lies in whether history will repeat itself?
On the attached EOD chart, I have shown a rectangle (in Blue) when Nifty Future consolidated for 38 days and achieved the target in 8 days after the break out. This time around (shown in Yellow) we had consolidation within the range of 4700 & 5200 for 53 days and breoke out of this range with a gap - which incidentally got filled up on Friday. Looking at the World markets particularly Dow, which has closed near the top of the week on Friday which indicates strength - despite all the well known negatives which I need not get into. The basic tenets of Charting and particularly W D Gann ideas is that history repeats itself. I would only say that the setup is ready for Nifty Future to achieve the target of 5700 (subject to hurdles on its way). Will the martket oblige?
For this I would consider crossing of following levels viz. 5250 - 5325 - 5400 as important. As discussed in Weekly and Monthly chart, Nifty Future will come out of the down sloping channel at 5420 and 5450 respectively. This will enhance the possiblity of meeting this target, as it will encourage more particpants to believe in this rally and bring wider participation/short cutting which can take us to the target of 5700 or there abouts in a short time frame. While all this may sound music to all those who have a bullish view on the market, I would hasten to add that when you see the previous pattern don't miss out to see the fact that even after a sharp up move, Nifty Future did go down eventually - may be to catch up with the fundamentals.
As this remains a conjecture, with the assumption that history will repeat this time too, one must not throw caution to winds when taking positions as the ground realities can not be more worse than what they are. However to benefit from any possible up move, I would consider buying a small quantity of 5300 Call Option of Dec series which is available at around Rs.30-35.
As regards the short position, I would not consider the same unless Nifty Future breaks 5140.
Considering the up move in US markets, we can expect a strong opening for Monday. This would make a typical Morning Star pattern on the chart if it opens with an upside gap.
To end this unusally lengthy post, I would breifly mention about the Index option data which shows increase of open interest on the Call side, by 19.32 Lacs for strike price of 5100 & 5200 and 5.05 Lacs for stike price 5400 & 5500. As against this, on the put side the increase in open interest is of 11.86 lacs for stike price of 4700 & 4800 (too far from the current market price and hence not of much significance) and just 5.12 lacs for the strike price of 5100. This too suggests the bias to be in favour of the long positions.
Please do not trade without STOP LOSS.
With Best Wishes,
Ketan Asher.
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