we will use this pullback to add longs with strict sl of 10780 .
positional target 12k
nifty low 10878
Technical Analysis is primarily study of Price & Volume and through these the mood of major market participants is gauged.
That the Budget was not Investor friendly was seen by the intraday drop to 10878 nifty spot. And I believe that the real LTCG Tax impact has yet to be seen in volumes --- so to that extent the Volume data (particularly how the Open Interest table develops in next few days) would be of utmost importance and at today EOD I would say this information is not yet complete. Still whatever it says can be seen in the OI table----with max PE writing (so far in Feb series) having occurred at 11000 strike-- this support point is easily identifiable. One has to calculate the Avg price at which this writing has occurred ( suppose this Avg comes to 150 then 11000PE writers would be supporting 10850 and not 11000) so to that extent without any major drop in 11000PE number, we may see price dropping to 10850.
Now coming to Price & Price derivatives -----
As mentioned in my previous post(s) I see the current dip as a short term correction to be measured by Hourly chart and after that there would be reversion to Daily trend (that is upward) and new highs would be seen. In addition to Price-points,my instrument for gauging the Hourly Charts' downmove is RSI.
The price action has confirmed two levels (in Hourly chart) :
10993 on lower side and 10100 on the upper side. If Hourly close starts occurring below 10993 , that would mean weakness and if Hourly close starts occurring above 11100 that means strength.
Now add RSI to it. Till hourly RSI remains below 58.55 (on Hourly closing basis) I would not initiate long position.
a poosible move
Now a look at OI table tells me that 11000CE is being written strongly thus a resistance is building up there.
As of now 10800PE writers are holding fort ---- and we must watch this strike closely to see if it would hold further or not.
On Price Charts 10660 is first appreciable support.
10600-10660 imp support zone