Medium Term Trend: ↑(UP)
Market update: Nifty had a cracker of a rally today. It opened slightly positive at 11615 levels and kept hovering around 11600 levels for most part of the day before shooting up to 11730 levels in last hour or so. It closed up 150 points at 11725 levels.
Day before yesterday Nifty 11700 CE strike price had seen an addition of around 30 lakh shares, today entire 30 lac+ got unwound. So this does make things pretty interesting, addition of such a huge open interest and unwind of same within next 2 days is very very rare. Also we needed Nifty to break below 11550-520 levels by Thursday ( tomorrow) to signify the start of trend reversal however Nifty took support at 11560 levels and once again bounced from there.
So after seeing todays rally its safe to assume that upside trend has resumed again? Well even though Nifty has closed above 11720 levels ( which we had mentioned as the key resistance level in previous post), the move has come only in the fag end of the session and is seem driven by short covering rather than actual buying hence need to see some more strength over todays high (11750 levels) to confirm the same. Had Nifty broken above 11700-720 in the morning session and then sustained above it for remainder of the day then probably we could have concluded that fear of correction is over but the manner in which 11720 is broken, we need to see some more strength or rather sustained trading above 11740-11750 levels.
On the other hand if Nifty again slips below 11700 and then below 11650 levels then probably this was just a false break. On Monday when Nifty had fallen 150 points ( 11750 to 11600), it had made a gap down opening and the gap stands at 11725-11750 levels. Today inspite of such a ferocious upmove, Nifty failed to close above the gapdown area. So its important that Nifty close the gap ( which is also the island reversal area), to negate the bearish implications of same. For now the gap still stands.
Also, looking at entire move from 10600 levels, You can make a strong trend line joining recent bottoms @ 10583 , 10730, 10850 & 11550 levels. This trend line was broken on Monday, now today even though Nifty bounced sharply it failed to close above the trendline. The upper level /resistance of this trend line comes to around 11740-750 levels ( exactly the high touched by Nifty today).
In Summary, even though Nifty has broken 11720 ( which shows Bulls are still in play and not in mood of giving up easily), we need to see sustained buying ( and not just a spike) above 11720-11750 levels now ( todays high) to conclude that fear of correction is probably over and Nifty is ready to move higher but if Nifty slips from these levels then probably the correction or sideways movement will resume.
Happy Trading!
Market update: Nifty had a cracker of a rally today. It opened slightly positive at 11615 levels and kept hovering around 11600 levels for most part of the day before shooting up to 11730 levels in last hour or so. It closed up 150 points at 11725 levels.
Day before yesterday Nifty 11700 CE strike price had seen an addition of around 30 lakh shares, today entire 30 lac+ got unwound. So this does make things pretty interesting, addition of such a huge open interest and unwind of same within next 2 days is very very rare. Also we needed Nifty to break below 11550-520 levels by Thursday ( tomorrow) to signify the start of trend reversal however Nifty took support at 11560 levels and once again bounced from there.
So after seeing todays rally its safe to assume that upside trend has resumed again? Well even though Nifty has closed above 11720 levels ( which we had mentioned as the key resistance level in previous post), the move has come only in the fag end of the session and is seem driven by short covering rather than actual buying hence need to see some more strength over todays high (11750 levels) to confirm the same. Had Nifty broken above 11700-720 in the morning session and then sustained above it for remainder of the day then probably we could have concluded that fear of correction is over but the manner in which 11720 is broken, we need to see some more strength or rather sustained trading above 11740-11750 levels.
On the other hand if Nifty again slips below 11700 and then below 11650 levels then probably this was just a false break. On Monday when Nifty had fallen 150 points ( 11750 to 11600), it had made a gap down opening and the gap stands at 11725-11750 levels. Today inspite of such a ferocious upmove, Nifty failed to close above the gapdown area. So its important that Nifty close the gap ( which is also the island reversal area), to negate the bearish implications of same. For now the gap still stands.
Also, looking at entire move from 10600 levels, You can make a strong trend line joining recent bottoms @ 10583 , 10730, 10850 & 11550 levels. This trend line was broken on Monday, now today even though Nifty bounced sharply it failed to close above the trendline. The upper level /resistance of this trend line comes to around 11740-750 levels ( exactly the high touched by Nifty today).
In Summary, even though Nifty has broken 11720 ( which shows Bulls are still in play and not in mood of giving up easily), we need to see sustained buying ( and not just a spike) above 11720-11750 levels now ( todays high) to conclude that fear of correction is probably over and Nifty is ready to move higher but if Nifty slips from these levels then probably the correction or sideways movement will resume.
Happy Trading!
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