In Last week’s update posted (http://vtrender.com/premium/nf-bnf-summary-for-weekend-21st-march/) there was a case made for the Nifty up auction to proceed to 6700 and the BNF to do 1000 points away from the consolidation it had been in.
As of Friday’s close the Nifty touched 6700 and the BN was half way on the road to 13300 having done 12780 from 12300.
We also had a series expiry on Thursday and a month end and quarter end tomorrow.
Let’s look at what the charts did in the month gone by.
1) Nifty spot Series vwap : ( Importance of 6474 for all April)
The series which closed shows the vwap on the spot at 6474 in the Nifty.
Through April series this is the one number for us to watch as we look for signs of buyers increasing or booking profits or even sellers taking over.
The value high for the series is at 6630 on the spot. There is no sign of trouble for longs till the Nifty stays above this VAH of 6630.
6474 is the average price volume weighted of course at which the longs were taken and carried into April. Though at some point of time in April this value of 6474 may get visited( if we break below VAH 6630) again, it represents an important place to see what happens in the auction process in terms of longs holding or moving out.
2) Up Auction in 60 mins chart : ( Mind your risk above 6756)
The rise from Mid Feb’s 5970 level is shown in the chart above in terms of the vwap in pink and a green channel which is unbroken on the lower side yet.
The pink vwap line of 6394 included the difference in prices from Mid FEB and MAR end and hence is a bit lower at 6394. This is the actual level of the trend and a second line of support below the March vwap of 6474.
The rising green channel is now placed near 6650.
The Orange vwap near 6700 represents the earlier 2SD vwap of the Big Trend shown in last week’s post.
We see the 60 minute chart having an ability to go 50 points higher at 6756 still . Hence it will be important to see what kind of volumes enter during this week if price has to probe above the pink line.
Remember the chart never tells price what to do, just that the possibility of price staying above 6756 on the chart on current volumes with no increase of volume is about 5% . Hence mind your risk.
The correction leading to the rally on FEB 14th ended with a 122 point drop from 6106 to 5984.
From the time the move has started from FEB 14th the average drop has been 73- 75 points and the biggest drop till date for this up auction is 128 points.
The first sign of the up auction running out of steam now is a drop of 75 points and the second sign would be 128 points of drop. From Friday’s highs of 6702 hence 6625 become important and then 6575.
6625 we have noted above is also VAH for March.
4) Summary for Nifty :
Even though we are near our mentioned target, we do not believe in reigning in the Nifty through a number on the chart. The markets can remain ir- rational many times more than many of us can remain solvent.
If we stay above the mentioned 6700, the Nifty through the principle of a break above the consolidation zone of 5975- 6350 can look to target 6850/ 6880 and then 7100.
It’s not wise to look for shorts but look for signs of exhaustion or profit booking or even new strength in the current move.
As mentioned in the trading room the conservative trader will let the auction play out as long as we keep trading above value high, vwap and continue range extensions above IB.
Other points to watch will be break of 6625/ 6475 during the coming week.
5) BankNifty Series vwap :
The banknifty’s series vwap is at 11860
Longs will continue holding up and buy every dip in April till we trade above 11860.
VAH is at 12582 and longs are in total control above 12580.
6) Up auction in 60 min charts :
The entire upmove from 10200 has a vwap at 11561 shown in pink.
There is still space for the auction in BNF to run up and levels of 13040 and beyond are easily possible even on current volumes.
The last consolidation in BN is shown in white on the chart and is near 12300 spot.
7) Reversals :
The biggest drop in BN has been 441 points made from 12308 to 11867 on 14th March.
From the highs a correction within 441 points will be perfectly acceptable in BN and can be used to make aggressive longs with a tight stop.
The law of reversals states that if the correction exceeds 441 points then BN can correct more by 441 x 2= 882 points .
8) Friday’s auction and outlook for Monday :
The BNF was mostly inside thursday’s expiry range and corrected the fall we had noted in the pre market post.
During that range correction we did not see new sellers.
The auction was a spike in the closing hour finishing near day highs.
Spike Rules state that a move above spike high in the IB is positive for the BNF. If we stay above 12879 the inside day break should bring targets of 13046 and 13213 before wednesday.
However in ability to move abv day high means an auction in the similar range as friday.
12710 is again support and a trip lower than 12710 can bring 12545
In the Nifty April chart above we see the same spike and close at highs.
6785 and 6835 are the two levels we can get above spike highs ( 6835 by wed)
On the lower side we make a trip to 6635 F if we go lower than 6685.