For the record, the Vix formula outlined in my previous post failed today.
Well we did operate in the range of 5276-5380 projected by the Vix and we did close above 5300, but the final close of 5320 fell far short of the projected 5380 top of the range we wanted.
That is the first time in 4 months that we have fallen short of the mark. The previous three attempts have been +/- 10 points off the mark.
For what lies ahead, let’s look at the charts :
The chart is that of the Nifty Future ( July) for the first four days of the week.
This week the market has auctioned and tried to create value in a region not seen in this expiry. Right from the gap-up this Monday to the close today we traded in new territory for the series except for a few minutes this afternoon.
The yellow arrows show that buyers and sellers have both tried to gain the upper hand with little success. The zone remains 5297-5377 with buyers in the bottom half and sellers in the top half.
Even from today’s profile, one can see the seller appearing when buyers were not able to drive prices a lot higher than yesterday’s close.
We call such activity a bracket in Market Profile.
Brackets usually happen at the end of a trend or at the beginning of one and are very easy to trade.70 % of the time markets trade in brackets and we should get used to them. On a longer time frame this entire year so far has been a big bracket and we do not seem to be getting out of it soon.
The trend is never your friend because history shows that we trend only 30% of the time.