Although the rise today took many by surprise, Nifty is very close to an important resistance, and if that level is not crossed, a very bearish pattern is developing.
The resistance is near 6306 - 6310 on Nifty spot, which is the 61.8% retracement level of the previous fall from 6415 to 6129.
If Nifty cannot cross this level on Monday, it will also complete a bearish flag pattern.
If this bearish flag pattern works, the confirmation will be below 6200 on Nifty spot, and this pattern gives a target of below 5950.
The options data also indicates resistance at higher levels.
6200 CE made a double top at 115 (yesterday and today), thus not crossing this will be a first sign of bears gaining the upper hand.
Secondly, although the PCR at 6200 is a healthy 1.76, (which indicates expiry above 6200), the PCR at 6300 is still only 0.59, which doesn't show any intent by Nifty to cross and sustain above 6300.
3 things to keep an eye on for coming days:
1. Nifty spot not closing above 6310.
2. 6200 CE not crossing 115.
3. PCR at 6300 strike price not rising to 0.9 or 1.
One can buy cheap January OTM puts (6100 or 6000) near 6300 spot with a SL above 6320, in anticipation of the bearish flag coming into play.
If that pattern works, these OTM puts can prove to be multibaggers.
The resistance is near 6306 - 6310 on Nifty spot, which is the 61.8% retracement level of the previous fall from 6415 to 6129.
If Nifty cannot cross this level on Monday, it will also complete a bearish flag pattern.
If this bearish flag pattern works, the confirmation will be below 6200 on Nifty spot, and this pattern gives a target of below 5950.
The options data also indicates resistance at higher levels.
6200 CE made a double top at 115 (yesterday and today), thus not crossing this will be a first sign of bears gaining the upper hand.
Secondly, although the PCR at 6200 is a healthy 1.76, (which indicates expiry above 6200), the PCR at 6300 is still only 0.59, which doesn't show any intent by Nifty to cross and sustain above 6300.
3 things to keep an eye on for coming days:
1. Nifty spot not closing above 6310.
2. 6200 CE not crossing 115.
3. PCR at 6300 strike price not rising to 0.9 or 1.
One can buy cheap January OTM puts (6100 or 6000) near 6300 spot with a SL above 6320, in anticipation of the bearish flag coming into play.
If that pattern works, these OTM puts can prove to be multibaggers.
8 comments:
hi ap,
this guy also has similar view of you
http://donovan-ang.blogspot.sg/
he is bearish for january/february
rgds
rajamani
6200 CE is going to around 160-170 by expiry
There could be a nice dip in Nifty to 6050 levels for a small shakeout and nothing major before it resumes its journey towards 6660-6700 Nifty.Nifty will fall towards 5100 by March/April 2014 only after that.
Sir u mentioned about Bearish Flag and also about 6200 CE not crossing 115 levels. Today the 6200 CE is trading well above 115 levels, but what is the bearish flag negate point/level which one should keep in mind.
spot 6320+ closing will negate that
There should be NO SURPRISES if expiry is at an ALL TIME HIGH 6415+ and a nice dip towards 6060 comes after that.
With today being a holiday its now likely that Nifty will head for 6450 only after the expiry and reach there possibly by Jan 3rd.Nifty to TOP out around 6660-6720 by Jan 2014 end and reach 5100 by March/April 2014.Any fall in Nifty limited to 6000-6050 before 6660-6720.
Unless a bolt from the blue hits the market in between, the next likely trigger for a mini CRASH is the FED and RBI meet on Jan 28 2014.
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