Last week we had a V shaped recovery and a 61.8% retracement of the fall which gave us a close in an area which would make both the existing shorts and the new longs tentative about the coming week which has a FED meet and an expiry session and a monthly close.
Our strategy has always been to allow price to do the talking and be a disciple of the market as it does that and hopefully with our charts we would be able to pick up exactly what the market wants to tell us again.
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Nifty OCT F |
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Background / Previous Auctions : Medium Term : We have maintained from Friday May 16th that the range of 7560- 7125 (spot prices) seen on that day forms the backdrop of the moves we may see in the Nifty for a considerable amount of time, as it was a 5 sigma event. The auction remains positive as long as we close above the highs of that day (May16) ( Friday 8th Aug – low was 7540 and close of 7568) The largest drop seen on May 16 th was 432 points and the rally from 5110 has never been penetrated by a drop of more than 450 points . In the current context the drop from the Nifty spot high of 8180 to the recent low of 7723 made on 17/10 equals 457 points. There was a failed auction noted at the lows on 17/10 which is a reference point and a market which tells us that it does not have new sellers. Short Term : The marked finished a full session above the longer time frame supply at 7920- 7940 spot. Support now placed at 7920 spot this week.Below 7920 the market can once again drop a 100 points to 7827 quickly. 8060 spot is now short term resistance.
Observations in Today’s session : https://www.dropbox.com/s/4g5gs9rqde49cv9/Oct_NF.png?dl=0 #) A two time frame auction and a normal day #) The market rotated either side of 8004 vwap and formed a bell curve #) Failed auction seen at 7752 F on 18/10 and is on day T+3 #) Day type was a normal day which created higher value.
Hypothesis : Hypo ) A break from a Normal day always put the market in a trend mode . Hence we would look to buy above 8022 for 8056 mentioned last week and 8082 and 8112 to follow. Sl for this view will be 7989. Hypo2 ) If NF auctions below 7988 then we would expect NF to go down to 7962 and 7932 next.
BankNifty Oct F : |
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| Background/ Previous Auctions :Medium Term-
Friday May 16th range of 15730- 14430 in spot provides a backdrop to the moves we may see in the BN for some time. There is a 1000 point move in BN when it trades above 15800 spot Our bias is positive above 15100 spot, and as long as the BN stays above 15100 we will trade towards 17680
Short term : . Support for the BN spot is now at 16300 spot this week followed by 16128. Resistance to the upside would be 16560 and 16720 this week.
Observations in Today’s session :
https://www.dropbox.com/s/r4rbs7x5ci8huw0/Oct_BNF.png?dl=0 #) The profile in the BNF was dominated by the seller from above 16550 and showed responsive buyers at 16400 F #) Profile shows single prints near 16630 #) vwap of the day was at 16489
Hypothesis : Hypo1) If the auction stays above 16550 then BNF can rise to 16630 again and auction this zone. Above 16630 the target of the move up becomes 16710. Hypo2 ) Below 16540 the BNF will revisit 16470 and possibly test the regions around 16380 for buyers. Below 16380 the BNF weakens to 16270 and 16050F. |