If Nifty has completed the decline from the high of 6142, there can be a retracement to this move starting tomorrow or Friday.
This retracement is expected to go towards 5940-5960 or 6010 – 6035, from where the downtrend can start all over again.
How does one trade the next downtrend if it starts – Options charts will provide the answer !
If 6050 is not crossed, I expect the next downward target to be below 5500.
I had posted this chart on 18th September for a possible trade in Sep 5900 PE here .
It is a different story that the market gapped up and the Put gapped down.
The updated chart of this Put is shown below, and it proves how old supports become
resistances.
I had posted a monthly chart of Tata Motors on 12th September.
For anyone who believes this chart, now is the RIGHT time to take the positional short,
with stop loss on monthly closing above the long term trend line.
Hai himmat?
Since a big event is approaching, it is necessary that short term traders keep an eye on the R: R
(risk: reward) before RR speaks.
An attempt:
Since the low of 5118 on 28th August, Nifty has given a fast and ferocious rally to
5957 in just 3 weeks.
Lot of traders either missed the rally completely (which is not a problem), but were
attempting shorts on any weakness seen on 1 min or 5 min charts.
Media can give this rally any name – the RR rally or the Ganpati rally, the fact is Nifty was at a major support.
The D-day is approaching---Now what? Those who missed the rally, are desperately looking for reasons to go short.
A study of the Options data for September reveals that a ‘top’ might not be so close as some think although a ‘top’
for this expiry might be approaching.
As seen from the following chart, although there seems to be a resistance from the CE writers at 6000 strike price,
the Put writers have created positions at almost every strike price.
One extremely important observation is that the highest OI in Calls or Puts for a particular strike price which normally
tends to go above 90 lakhs or even 1 crore, is just around 60 lakhs in the current expiry period.
Chart showing OI at various strike prices:
The PCR (Put-Call ratio) at individual strike prices also reveals that resistance lies ahead,
since the PCR at 6000 isjust 0.26, although the PCR at 5900 has been steadily increasing
and is now 0.99.
Chart showing PCR at various strike prices:
Thus in the even of any sharp rise post Fed or post – RBI policy, watch the band
70-75 in the 5900 PE for further direction (chart below).
If the premium for the Put reaches that band and the PCR at 5900 has stopped rising
and that at 6000 is not rising, THAT might be the TOP at least for this expiry,
and one can buy the 5900 Put with a stop loss of say Rs. 10.
However, if the PCR at 5900 and 6000 keeps rising, and the above levels are broken
on the 5900 PE, a sharp spike cannotbe ruled out.
As of now, expiry seems to be nearer 5800 (or even below) than 6000.
More updates in Live markets as we go ahead………
Please do comment on the posts.
Happy trading………
The Put crosses resistance 45. Can go anywhere now; follow
the previous highs on the left of the chart, and trail suitably.
As long as Tata Motors remains below 350-360, it can decline to 275-280
and on a monthly close below 275, can go down all the way to 200.
MONTHLY CHART:
Although Nifty made new highs, 5600 (below) and almost all CEs of other
strike prices did not make new highs.
Caution in longs now. Nifty can pullback, and the 5500 PE posted last evening
can come into play.
Although the trade failed today, it can still be bought if it does not go below 20,
or goes back above 50; Above 60, might go to 100-120.
Watch the levels mentioned on 5500 PE in case there is a gap up on Nifty
tomorrow.
Chart posted on 2nd September:
Chart updated till yesterday and lines redrawn slightly:
Crossing 5650-60 and sustaining above it gives an unthinkable target
as per this pattern (close to 6000)
Although the market is in a sell mode on all time frames,
Nifty is flirting around the 200 weekly MA. This made me
take a look at what had happened when Nifty was near the
200 weekly MA the last time, and the results are given below :
(Fundamentals can be debated, but charts cannot be ignored)
Nifty took support at the 200 weekly MA first in December 2011,
when it rallied 24% from a low of 4531 to 5629, and then
fell back to the 200 weekly MA.
INTERESTINGLY, in the last week of May 2012, Nifty made hammers
on 2 consecutive weeks but again came down in the third week
(something similar to what is happening now). The next week,
after making a low of 4770, it rallied over 30% to 6229.
WEEKLY CHART:
The only time Nifty went well below the 200 weekly MA was in
October 2008, when it just sliced through the important support.
The pattern on hourly charts is also very similar, as shown below:
HOURLY CHART IN DECEMEBR 2011 :
HOURLY CHART IN JUNE 2012 :
CURRENT HOURLY CHART (SEPTEMBER 2013) :
This post is not at all about ‘bottom fishing’, but one needs to
keep an on the first signs of reversal.
Who knows, a 15-20% rally might be round the corner.
Going by history, a rally is possible, let people call it the Raghuram rally,
or the Lord Ganesha rally !!
Unlike previous months, Nifty straddles are all over the place
without giving a clue what they want to do next.
If 5335 is held on close, an Inverted Head and shoulder is possible
If Tata Steel cannot cross 293, and drops to 255-265,
BUY it with sl 250
1000 to 17.5 in less than 4 years !! A bounce coming?
Above 19, with a sl near 17, can go to 27 and
close above 28, can go to 40
BankNifty futures has given a breakout from a parallel channel.
Hold longs with today’s low as SL
BAJAJ HINDUSTAN
Bajaj Hindustan – Buy on dip with sl below 12;
Book partial near 16-17, and hold rest
