On the edge of balance

Yes, that where we ended in the Nifty and the Bank Nifty today, on the edge of balance.

I’m of course referring to yesterday’s post and the balance zone of the past three days. Many times a composite profile takes more than a day to resolve ( if it has to) as it has been developing over a few days.

So Buyers pushed sellers to the brink, but could not topple them over, though the OI data will show a lot of short covering, but they are still around.

Nifty Mp2 On The Edge Of Balance

The red rectangle is the break up of the profile chart of yesterday.Once price reached the top of the development, there was hesitation at the previous single prints and a bell shaped distribution started which was an indication to part book longs from lower levels on an intra basis.

In the bankNifty, there was a little enthusiasm above the 10715 level, which was the region to shut off new buying for the day.

Bank Nifty Mp On The Edge Of Balance

The red rectangle is again the 3 days of this week on the left and the profile of today shows development again in the single prints.

So what is the message the market is trying to send here :

!) From the chart above, it is clear that any weakness at the open tomorrow will send the market down to the centre of the zone currently near 5478 levels.First sign of that happening will be a convincing break of 5523 tomorrow.

2) If we have to look the other side and we have a strong open, then it means a break of the three day balance which will bring 5577, 5625 and later 5677.

Here’s a daily chart of the future :

Daily Profile On The Edge Of Balance

5625 is the zone of previous selling as also the zone of the 200 DMA. Since the market has a lot of people who trade on parameter based indicators as opposed to market generated information, one can expect this level to be over-run and 5677 attempted.But nevertheless between 5625 and 5677 the real test on the upside for the market will happen.

The Open holds the key again for tomorrow.