Nifty at a long term support

The low on Nifty spot is bang on a long term trendline right from where this bull run started.

If this support holds, there can be a rally - whether a pullback rally, or a rally to new high, time will tell (rather options charts will tell).

It makes sense now to hedge shorts, or even take naked longs with 7800 as stop loss, on Nifty spot 

Same support, but at a higher level this time

It was mentioned in the post dt 16th September, why the level near 7925 might give support and had said --

"If this region gives support once again, bulls have some hope to make another attempt to conquer the formidable 8150 - 8200 resistance."


Nifty did get the support and did make an attempt to cross the formidable resistance, but failed (in the process made a triple top at 8160 on 3 consecutive days, this top is also a double top on weekly charts now, unless crossed in the next 2 days..unlikely! )

As explained through tweets, this was visible on the 8100 CE which made a double top near 83, and this CE crashed to a low of 2.25 today !

Nifty made a panic low at 7950 today and again hit the 200 hourly moving averages.

8000 CE also hit the support band (tweeted a few times), and went below it briefly in the panic after the SC verdict on 'Coalgate'.

Nifty is now oversold on hourly charts, and with expiry tomorrow, it will be interesting to see if expiry is closer to 8100 or 8000. My guess is, it will be between 8050 and 8075)

It is likely that Nifty might be rangebound next week too (7930--8150)

The bullish Harami has played its part...now what ?

Every candlestick pattern can be called a pattern only if there is a followup action in the next couple of days, and the Bullish harami candle of yesterday got a confirmation straightaway today.

Now, what next? Logically, the previous all time high should now be crossed in coming days.

Below are some facts based on charts of futures and options that can help in managing the long trades.

Firstly, bears can claim that the rally today was just a gap fill (8100 to 8134 was a gap over the weekend) on Nifty futures.

To negate this, Nifty futures has to cross the first hurdle at 8148-8150, which was a double top. There are some resistances above that too.

PCR at 8100 strike price is 0.9 as of now, and this will give further hints. 

This has to rise way above 1.2 as soon as possible. This will happen when 8150 is crossed, and also when 8100 CE shorts are covered and at the same time, OI of 8100 PE rises (should go well above 50 lakhs).

 

If all of the above happens in the next couple of days, logical target for the 8100 CE is near 140!! (cmp 68)

So, keep an eye on the OIs of 8100 CE and PE tomorrow to get a hint regarding future price action.

Nifty at crucial level

Something for the bulls:

Although Nifty declined sharply today, it is at a critical level on the charts as explained below:

Ever since this bull run started from 5930-40 in February 2014, Nifty has taken support around the 200 hourly moving averages thrice so far, and the low today was again near the 200 hourly moving averages (Simple and exponential).

If this region gives support once again, bulls have some hope to make another attempt to conquer the formidable 8150 - 8200 resistance.

The next 2 days will be very crucial (have I heard this before?).

Ideally, Nifty needs to open with a gap tomorrow and go straight up, since more time spent around these levels will be an invitation to more bears.

The 8100 CE hourly chart also shows how the panic low was bang on a previous low near 15 today.

One overnight hint will be available from the India ETF - INDY in the US markets. INDY gapped down today to 29.68 to fill a gap. If it closes above 30, it indicates that bulls have some fight left in them.

So, watch where INDY closes when you get up tomorrow.

INDY hourly chart :

 

Nifty reversal ?

Nifty is overbought on hourly, daliy, weekly and monthly timeframes (stochastics above 95)

Nifty daily candle formed a DOJI yesterday (at the top), and is now trading below yesterday's low.

This can be a potential reversal.

How can this be traded now?

Buy 8000 PE on dips, with sl below recent low (42.5), for a possible T1  of 100.

If this PE crosses 120, 150 is also possible.

 

Happy trading !! 

 

ITC trade (360 CE)

ITC is holding up well in this fall, and can move up.

A low risk trade is to buy 360 ce on dip near 2.5, with SL below 2, 

Targets 6 - 10-12

Happy trading !!

SBI trade (2400 PE)

SBN 2400 PE, buy 20-22, SL 15.
 
Some people might be wondering why this trade was given. 

Following is the trade setup :SBI cash and futures both made a doji on daily charts yesterday, and have given a low below the low yesterday. There is also a trendline shown in the chart acting as a resistance.

The PE chart gave a low risk setup, SL below recent low.

SBI futures daily chart:

 

SBI 2400 PE hourly chart :

Potential targets: T1 40-45; T2 60-65; T3 75-85, and maybe 95 too