The NF had an inside day and the BNF was volatile but trended mostly lower after the IB period highs
The BNF opened strong and had OTF at the open again in the form of a drive making us chase some expensive longs above 12228 our primary target.
However the reversal from 12333 was equally swift as profit booking emerged.
A look at the net open interest chart of the BNF shows how contracts were closed today
This reduction along with the excess seen in the Market profile chart below at the top near 12335 shows a short term top in place which may last a few sessions.
I spoke about the 3-1-3 pattern in the trading room today.
The 3-1-3 is a distribution pattern which shows excess at 2 ends and a market rejecting those 2 extremes to auction in the middle or in between them
we are seeing those 2 extremes on the chart above at 12335 and 11821 and the BNF should stay between these 2 points as our primary hypothesis.
That is a range of about 514 points and large enough for the BNF to stay in and digest recent gains.
From a trading perspective for tomorrow the vwap will resist at 12161 tomorrow followed by our earlier targets of 12228. However positional sells will have stops above 12335 only.
Buyers are expected to show up if the index drops to 11800- 11850.
The Nifty had an inside day.
We had mentioned weakness below 6557 and 6520 in yesterday’s post.
6520 was defended and only a move below that can bring 6480/ 6446 in tomorrow’s auction
Bias in Nifty is definitely sideways now.
But inside day ranges when they break give excellent trade opportunities.
2 day vwap is at 6554 and decides our bias for a break of 6520 or 6595