Market was benevolent today. Now why I say that? I essentially wrote 4 points in my last post on weekend: 1) Market would open gap up by around 150 points, (2) It would rise from there as well, (3) Maruti, Heromotocorp, Bajaj auto have had their run up already so trade these with caution, and (4) Impact of DJIA fall of 2.37% will be minimal. I was wrong on 4th point. On other three I was right though it did not move the way I thought it would. So Nifty openned at 11000, gap-up by almost 170 points, went down by around 244 points ( so that all those traders who had shorts could cover them or even earn some marginal profits), then started moving up ( for the obvious rally fuelled by relief measures announced on friday) and closed above openning price. Tell me, is it not benevolence? That it allowed people not to make losses on shorts and also allowed traders to long and make profits on other side, if they had taken some longs in the openning hours of market. And this was rare. I haven't seen many such occassions. But how many could actually trade both legs and make money? Salute to vagaries of market! Now, what about tomorrow? Let's see. 1) FII & DII data- According to provisional data, FIIs were Net Sellers by around 753 Crs and DIIs were Net buyers by around 1272 Crs. According to final data, FIIs were Net Sellers in Equity by 1657 Crs and Net buyers in Index futures by 428 Crs and in stock futures by 427 Crs. I believe, FIIs sold today on international pressures and bought later when news broke that China & US were again coming to table for discussions. Frankly, its a sham! The last meeting, 18th one at that, ended mid way without any aggreement. China knows too well that the discussions are over for good and it is preparing accordingly. So on this front do not expect any credible good news. Trump will keep tweeting and US markets will keep reacting or rather overreacting! God help them. 2) Option Chain data- On PUT side, highest total OI ( 34.48 lakhs) and second highest fresh Put writing (10.51 lakhs) is at 11000 strike. Highest Fresh Put writing (13.47 lakhs) is at 10900 strike. At other lower strikes too there is impressive total OI. So as of now 11000 & 10900 look Ok supports to me. On CALL side, highest total OI (31.53 lakhs) and highest fresh Unwinding( 14.54 lakhs, on any strike , any side) is on 11000 strike. There is no good fresh Call writing on any strike, so Call writers are divided and understandably so since Nifty rallied by more that 300 points from it's low in a single session. So there is no credible resistance. 3) Charts - Here there is dilemma. Gap up, huge run up and good impressive fundamental reforms, all point towards a bull rally. But on daily charts (for Nifty as well as for bank Nifty) today, the candle it made is known as 'Hanging man pattern'- A pattern that is recognised by long shadow/wick on lower side and very little or no uppper wick with small body. This is hugely bearish pattern. Please google it for more info if you want. So what could go wrong? One, internation markets for one and Rupee value Vs USD for two. INR is quoting at 72.0520, above the comfortable level of 72. Conclusion- OC data points towards a bull rally but charts point toward downside, so do not rush into any trade. Long at around 10900 and short between 11145 -11180 with a SL of around 30 points for a gain of 60-70 points. All the best. Happy trading.
The candle stick pattern is a bullish hammer not a hanging man (Hanging man is usually occurs at the very top of a rally and is red which means Sellers shorted at the high point and dragged the price lower, then bulls made a comeback but failed to close above the high price of the day. Which means sellers (Red hanging man) were still in control).
protrader1969
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@neelimapitroda, As much As I know, colour of hanging man pattern is not important, it helps if it is red. Your reasoning that sellers drag it to bottom and bulls just can't rise above high is right and earlier I too thought that. But a researcher, Bukowski, who had investigated more than 20000 hanging man patterns found that green or red it doesn't matter.But yes you are right that it occurs at top. I thought the trendline which drew can act as resistance and might not allow BNF to go up. But this required a confirmation - that it should have openned gap down and close today below yesterday's close. BNF today opened gap up so the pattern may not work.
knishit1977
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I partially agree with you. The last pattern with lower long wick shows rejections below so it is bullish. The problem is resistance just above it. If we go long our risk reward will not be good. If we wait, till resistance and see the reaction, we can get better clues. your view to wait is welcome. If price is rejected above, means few more days, we have downside. If it crosses, then investors can have a relief. Thanks