There were more definite signs of the sellers becoming active today as the Nifty witnessed the largest point drop of 50 points even as the market continued the imbalance.
As Markets move beyond all time highs it’s these wonderful projected values off our Market Profile Charts which will keep giving us an edge as we probe higher into unchartered areas. Case in point check the high of today against the hypo2 estimate in Nifty .
Nifty Sept F
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 430 points .
Targets for the Upmove remain 7900 spot (achieved) and 8300/ 8581 in the medium term. Support at 7500/ 7100 spot.
Our Profile studies indicate 11600 as a long term target on the Nifty in 2016-17 provided 6300 holds through 2015
Short term :
Today was evidence that step 2 of the Steidlmayer distribution discussed here is Over and the Markets head back to Imbalance. In such a scenario the first imbalance target of the new move will be 8104-8124 (achieved on 02sept)
On the Monthly Time frame we see September Nifty having supports at 7835 and 7706 on spot levels and targets of 8068 spot (done) and 8226 spot.
Support for the current week has moved upto 8101 from the 8062 F given earlier yesterday.
Observations in Today’s session :
1) OrderFlow shows sellers getting more active than yesterday
2) vwap of the day was at 8140 up from 8100 yesterday. Hypo1 fell short by 6 points but hypo2 went on to estimate 1.
3) Day type was a normal variation day with an upper range extension
4) Failed auction noted at 7955 on 27/08 is on day T+4 now
5) Single prints noted at 8016 would indicate a new support base near 8016.
Hypo1 ) 8134- 8139 is the reference area for tomorrow and a move below 8134 yet again targets 8112 and a possible 8087,
Hypo2 ) If we stay up above 8139 tomorrow then the NF would rise to 8174 and 8193 again.
BankNifty Sept F :
Background/ Previous Auctions :
Friday May16th 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 :
On the Monthly time frame support for Sept BankNifty is at 15580 spot followed by 15200- 15100 mentioned above. First target would be 16335 followed by 16795.
For the week support moves to 16110 up from 15683 sept F given 2 days back. If 16124 sustains then BNF would trade upto 16526 during the week
Thursday Observations :
1) A 2 sided auction mostly in yesterday’s range
2) vwap of the day placed at 16174 in the same place as yesterday
3) Day shows a prominent POC again at 16180 equally controlled by buyers and sellers
4) Pull Back low from 01/09 was at 16004 and would be an important point for the coming sessions
5) The market made 6 trips though the previous day’s value area each time successfully auctioning VAL to VAH and back to VAL.
6) Balance confirmed today
Hypo1) More likely the 16250- 16110 range may play out again in the first part tomorrow. The idea would be to short near 16240 and buy dips closer t0 16130. Reward can be 80- 100 points like today.
Hypo2 ) A break of this range can set up a 300 point move either to 16520 above 15255 or down to 15800 below 16090.