indiamarketoutlook

Nifty: For fresh position Gaps might give the next signal

NSE:NIFTY   Nifty 50 Index
Nifty

In my previous post when Nifty was at 15638 we had given a positive trading strategy
and that was to Consider to sell 26 Aug expiry 15400 Put option around 150

However at current levels, there is no clarity once again.

Why am I saying this?

Usually when price increases, Open Interest in Futures should also increase. However, it was observed that the rise in price was accompanied with reduction in Open Interest by 8%.

which fuels that yesterday's rally was led by short covering rally.

Hence it is prudent to wait to see whether there is a follow up buying or not.

Another way to look at it... We have a gap resistance zone on the upper side and gap support zone on the lower side.
Both the gaps are not that far away...

If the gap is taken out it would give clue where the strength lies.
For fresh position, one can wait for Nifty to break either of these gap levels on hourly chart for a trade in that direction.

Strategy update
15400 Put option CMP 74

recommended booking 50% profit at 72 and trail Stop loss to 90 for balance. This would ensure profitability in trade.

Take care & safe trading...!!!