PostMortem on BankNifty Today & Analysis of 07 NOV 2022
Quite an eventful day today, Banknifty opened mega gap up at 41740 crossing 2 resistance levels in a single go (41314 & 41459). The first candle was red but with a long wick on the bottom - indicating that the opening trade was favoring the buyers.
The major reason for the gap up was SBI which published good results this quarter.
There was a decent fall till 11.25 where the BN tried to cross the 41459 support level - but it couldnt until 13.20. The candle at 13.20 was pretty long and red maybe just indicating that there could be a bit of selling pressure in the days ahead - unless the SBI results are macro shift capable.
BN took support at 13.30 and then had a decent & strong buying momentum till close. It went from 41338 to 41758 between 13.30 to 15.20. The green candle at 15.00 negated the red one formed at 13.20
So now we have the BN near the all time highs and no more resistance levels - this make it quite difficult to set a risk:reward ratio for the trades.
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Of the major bank nifty components
SBI ended the day with a gain of 3.4% making a 52wk high of 622.7
HDFCBk traded the 1st hour with a negative bias, and then made a strong rally from 10.15
ICICI started positive and then faded into red by 13.25 and then had a super rally to close the day
Axis bank also started gap up went to negative territory by 10.25 made an intraday low at 11.25, a retracement bounce till 12.20 and then slipped back to negative. The final hour showed strength and the closing was in green.
Kotak and IndusInd had a similar kind of chart pattern, gap up opening and then trading below the negative territory throughout the day.
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Look at the open and close prices - they are almost the same. Guess what would have worked today? Yes short iron fly.
Also shorting CE options or doing a CE credit spread would have worked out well as the time decay was higher due to holiday on 8th Nov. But shorting the calls would require quite some nerves as the bank nifty is as all time highs and there is no resistance.
Mostly markets will follow the path of least friction, here it says UP. Because we do not have any more levels to watch. A single breakout rally can shoot the option premiums exponentially high. So request all traders to either set the stop losses or get into fixed loss strategies like ratio spreads, iron condor, iron fly or credit spreads (emphasis on credit as the time decay will help)
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SPX and bank nifty gap keeps diverging. There is a possibility of convergence if SPX rallies this week. As the mid terms elections and the US CPI data is due this week - we can expect an eventful price action till 11th Nov.
The nearest support level is at 3737 and the resistance level is at 3813. From the 1hr red candle made on 14.30 there may be stiff resistance going into 3800+ levels. But if SPX manages to cross above that then the next 100pts can be scaled up so easily.
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15mts is showing sideways market only, even though we had a gap up and resistance breach
1hr shows bullish momentum unless otherwise it settles for a top formation. So we watch the next 3 days closely and then decide
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Bank nifty support & resistance levels
s1: 41459, s2: 41314
r1: no resistance as near ATH
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PS: Read the standard disclaimer at: bit. ly/3Nm3RER
The major reason for the gap up was SBI which published good results this quarter.
There was a decent fall till 11.25 where the BN tried to cross the 41459 support level - but it couldnt until 13.20. The candle at 13.20 was pretty long and red maybe just indicating that there could be a bit of selling pressure in the days ahead - unless the SBI results are macro shift capable.
BN took support at 13.30 and then had a decent & strong buying momentum till close. It went from 41338 to 41758 between 13.30 to 15.20. The green candle at 15.00 negated the red one formed at 13.20
So now we have the BN near the all time highs and no more resistance levels - this make it quite difficult to set a risk:reward ratio for the trades.
---
Of the major bank nifty components
SBI ended the day with a gain of 3.4% making a 52wk high of 622.7
HDFCBk traded the 1st hour with a negative bias, and then made a strong rally from 10.15
ICICI started positive and then faded into red by 13.25 and then had a super rally to close the day
Axis bank also started gap up went to negative territory by 10.25 made an intraday low at 11.25, a retracement bounce till 12.20 and then slipped back to negative. The final hour showed strength and the closing was in green.
Kotak and IndusInd had a similar kind of chart pattern, gap up opening and then trading below the negative territory throughout the day.
---
Look at the open and close prices - they are almost the same. Guess what would have worked today? Yes short iron fly.
Also shorting CE options or doing a CE credit spread would have worked out well as the time decay was higher due to holiday on 8th Nov. But shorting the calls would require quite some nerves as the bank nifty is as all time highs and there is no resistance.
Mostly markets will follow the path of least friction, here it says UP. Because we do not have any more levels to watch. A single breakout rally can shoot the option premiums exponentially high. So request all traders to either set the stop losses or get into fixed loss strategies like ratio spreads, iron condor, iron fly or credit spreads (emphasis on credit as the time decay will help)
---
SPX and bank nifty gap keeps diverging. There is a possibility of convergence if SPX rallies this week. As the mid terms elections and the US CPI data is due this week - we can expect an eventful price action till 11th Nov.
The nearest support level is at 3737 and the resistance level is at 3813. From the 1hr red candle made on 14.30 there may be stiff resistance going into 3800+ levels. But if SPX manages to cross above that then the next 100pts can be scaled up so easily.
---
15mts is showing sideways market only, even though we had a gap up and resistance breach
1hr shows bullish momentum unless otherwise it settles for a top formation. So we watch the next 3 days closely and then decide
---
Bank nifty support & resistance levels
s1: 41459, s2: 41314
r1: no resistance as near ATH
---
PS: Read the standard disclaimer at: bit. ly/3Nm3RER