The index closed comfortably above its 50% retracement level of 22120 but below 22250 (initial resistance in the first hour today). Although the index has been scaling new heights, its visible that the up-move is becoming a struggle. 22400, a crucial level, should be the next deciding point. However, there are more reasons for the index to correct a little from these levels than continuing the one-way ride. Some of them are as follows -
1. The index has retraced more than 50% of its recent fall, purely, by tracking global indices. The recent monetary policy did give the index a push but aggression was missing.
2. 22400 not only serves as 61.8% retracement of recent fall but also 38.2% retracement of its fall from all time-high. The level has witnessed strong distribution on several occasions in the past. It is also, coincidentally, the upper end of the rising trend channel.
3. Stochastics on the hourly chart is at the overbought zone and is also showing a divergence from its previous high in contrast to the candlesticks.
On the upside, even with a gap up, 22400 will act as a pivot point. Ideally one can short between 22400-22500. The stochastics-divergence-led-correction hypothesis will be negated if the index takes support and closes above 22500.
On the downside, if there is a gap down, 22250-22200 would be good levels to go short for 22120-22050-22900. However, the options OI data suggests that the expiry would probably be above 22000.
Expecting the expiry range to between 22000-22500.
1. The index has retraced more than 50% of its recent fall, purely, by tracking global indices. The recent monetary policy did give the index a push but aggression was missing.
2. 22400 not only serves as 61.8% retracement of recent fall but also 38.2% retracement of its fall from all time-high. The level has witnessed strong distribution on several occasions in the past. It is also, coincidentally, the upper end of the rising trend channel.
3. Stochastics on the hourly chart is at the overbought zone and is also showing a divergence from its previous high in contrast to the candlesticks.
On the upside, even with a gap up, 22400 will act as a pivot point. Ideally one can short between 22400-22500. The stochastics-divergence-led-correction hypothesis will be negated if the index takes support and closes above 22500.
On the downside, if there is a gap down, 22250-22200 would be good levels to go short for 22120-22050-22900. However, the options OI data suggests that the expiry would probably be above 22000.
Expecting the expiry range to between 22000-22500.