In Last week’s post (http://vtrender.com/premium/nifty-weekly-update-31st-march-to-4th-april/) we spoke about the strong UP auction and the fact that it was trading above the last series vwap then identified at 6474 and 11860.
We were also looking for signs of reversal or a pause to the upauction.
First let’s look at how the series is developing so far.
In my last post made on thursday on the main blog page I had noticed a lack of big interest in the current series or even new interest joining or leaving the current trend. http://vtrender.com/fiis-in-fno-03rd-april/
Here is the Nifty Series Vwap of the April Future :
The current series is showing a vwap of 6736 in the futures at the end of week 1 of trading.
The lack of participation I spoke about in that OI post is reflected in this vwap chart as well which projects a narrow range of 6825- 6650 for the developing series based on current volumes and participation.
Here is the BNF chart of April series (developing)
This one shows a developing vwap of 12722 in the BNF and a range confined to 12961- 12483 for the current volumes.
So if volumes do not pick up in the coming week we are looking at a narrow range bound series.
We have 4 trading sessions in the coming week, 3 in the next and 3 more in the expiry week which is a total of 10 sessions left for April to expire.
All indications seem to suggest that it will belong to Option writers playing time decay with a keen eye on Vix.
What about the main trend or the UP auction
Using auction market principles it is very easy to identify a trend catching up or fading. Accordingly we had identified a move above previous day VAH as signs of the auction continuing and a move below VAL for a down move to begin in the intra day time frame.
The BNF value chart of the week shows that after RBI day the index has not managed to close or stay above VAH.
So far there is no convincing effort to move below previous day’s value.
We will watch for signs that sellers begin dominating below VAL for the upauction to reverse.
In the NF chart above we saw a move above value on wednesday and a market closing at VAL on friday.
The overall value picture in both charts is still moving sideways in line with the market being in range bound mode (progression of value upwards has stopped this week)
The Nifty auction above shows excess at 6794+ on 3rd April.
We pointed out earlier that this was a market not able to get new buying above 6794.
The law of the auction market would now state that it has to rotate lower to find new buyers. In the process sellers can come and take control of the main trend.
we should be looking to buy new inventory only above 6700 F now.
Chances of this market testing 6704 and even upto 6648 in the coming week are bright.
6752 is the vwap of last week and the market will remain under pressure below 6752 in the coming week.
The BNF chart also like the NF above has failed to find new buyers above 12910 +
On friday it was attempting a break of the 3 day inside day pattern but reversed sharply higher and came back inside.
We identify 12456- 12420 as the top of the previous balance zone of march as also the zone where the excess began on 24th March. ( refer to 24th report and chart)
Spot traders trading the BN spot would identify 12320- 11950 as the zone of March before the break higher as also previous swing top in this range.
The correction of BNF from high to lows was 440 points this week and matched the correction in price seen in march during the above mentioned consolidation.
The seller will gain control below 12400 F and can target levels upto 12000 if that gets broken during the week.