On Thursday the NF broke away from a multi session balance as well as the weekly support of 8420 and July series Vwap of 8446 creating a huge imbalance which as we pointed out in our Friday 21st Aug update “had the potential to visit 8150 levels”.
We noticed dip buyers in Friday’s auction at 8222 levels and on Monday should the same be shown in our OrderFlow indicators we would use the dip to 8150 levels to build long positions for the week.
Last week’s post is up for review here :http://vtrender.com/nifty-bn-weekly-view-spot-for-17-aug-21-aug15/
The charts above do suggest a break from the 6 week balance and has the potential to take the index to year lows near 7950 levels. However the rules of Auction Market Theory would tell us that we need a test of the broken balance first before a sustained move lower.
So for the coming week we would split our strategy to a dip buy in the early part of the week and a sell on rise as the week progresses on higher levels.
What are the levels the charts project?
First we see a support at 8132 spot on the index. We would initiate a long position here for a retest of 8320 and 8386 with stops below 8075 spot.
If the index however fails to scale above 8180 levels in the first 2 sessions of the week then we go with a short view again here for 8017 and 7940.
In the latter part of the week if OrderFlow shows sellers getting stronger then we want to reverse the bias at levels near 8386 spot and go with a short view again. As mentioned in the Trading room on thursday the levels of 8420 F were broken by strong selling orderflow and we will keep that level as a short reference point in the coming weeks.
For the expiry week the BN has a major play on the Option side where we have seen an unwinding in the 18000 put strike and a buildup in the 17500 strike put side. This suggests that the option players do not see the potential of the index to climb up above old support at 18200- 18300 spot levels.
We see support weekly at 17683- 17720 in the coming 2 sessions. If these levels give way the BN could drop to 17340 and 17125 during the expiry week.
We see resistance coming at 18154 and at 18380 on rises. These higher levels of 18380 could be used by the market to cut long exposure and build short positions.