Context and current trend
Let's start with monthly view. June month had a range of 15450 and 15915. So far, July has been trading inside this range. July candle is yet to complete but the shape of consolidation is not a pullback ( Lower low candle), but rather tiredness in the ongoing up move. Need 2%+ move this month to continue the strength in the uptrend. VIX is also at lower levels, but has not gone below last month's low. To assume the continued uptrend NIFTY at least need to close above 16000. A good candle close will be an additional confirmation.
Weekly NIFTY is consolidating in the narrow range of 15635 - 15900. This is a very narrow range. The upper boundary has been tested 4 times and lower boundary has been tested 3 times so far. This tells the range is about to mature and breakout is a strong possibility for this week.
Studying price action in the range is not very useful in my experience as clear trend is absent. Hence daily candle study is not useful.
Anticipating Monday
1. Thursday expiry was a shock for traders holding long positions. Friday was indecisive. This action actually gives no clear trend. But it clearly draws the leaves we can assume for the direction.
2. Gap up open above or cross of 15730 clearly signals reversal for two days action, and this time if it happens resistance of 15900 is likely to be broken.
3. Any close or slipping below 15630 is continuation of the down move.
More on levels and timelines
1. Looking at 75 Min chart, close below 15680 on 15 min chart , will be a signal for building bearish position.
2. Resistance is in the band 15760-15780, where there may be an attempt to stall the NIFTY in case of an up move or gap up.
3. In case of gap up, the real test and confirmation of the reversal is around 15820.
Open Interest Data
1. 15700 strike is like a battle strike where large CALL OI 2x of PUT OI. This gives important levels as 15770-15800. Support at 15590-15620.
2. Following other strikes, 15600 and 15800, important levels are 15540 and 15840.
Trade Plan for Monday
1. Not carrying any positions.
2. Flat opening inside Friday's range 15630-15730 :
a. Wait without any trade for range breakout and trade in the direction of the breakout. (15 Min timeframe)
b. Assume downward breakout and build Bearish Spreads (15750-15800)
3. Opening with Gap above 15730
a. If is below 15760, likely to pullback towards 15730 or even towards 15680. Check if pullback is bought and then initiate positional long with stop loss of 15680
b. If above 15760 and 15780, wait for first three candles and buy for target of 15830. That’s around 50 points. Stop loss being 15730
c. If gap up above 15780, may lead to short covering and may not give chance to buy. Wait for crossing 15840, fail there and when it crosses again, buy quickly. SL will be low of the day
4. Opening just below 15630 :
a. Wait for first 5 min candle and if trade can be entered around 15630, sell for target of 15550 with SL of 15690
5. Gap down below 15600 :
a. Wait for pullback towards 15600-15630, initiate positional short.
Possible option trades
1. Possibility 3a : Long 15800 CE or Short 15700 PE
2. Possibility 3b: Long 15800 CE
3. Possibility 3c : Buy 15900 CE / 16100 CE Spread
4. Possibility 4a : Short 15800 CE
5. Possibility 5a : Buy 15600/15500 PE Spread or Sell 15700/15800 CE Spread
Things to remember
1. Check open Interest for managing the trade
2. Follow the price action and trade only near the levels.
3. Check VIX
4. Use predetermined SL for intraday. For spreads wait till EOD.
Wish you a great trading day!
Let's start with monthly view. June month had a range of 15450 and 15915. So far, July has been trading inside this range. July candle is yet to complete but the shape of consolidation is not a pullback ( Lower low candle), but rather tiredness in the ongoing up move. Need 2%+ move this month to continue the strength in the uptrend. VIX is also at lower levels, but has not gone below last month's low. To assume the continued uptrend NIFTY at least need to close above 16000. A good candle close will be an additional confirmation.
Weekly NIFTY is consolidating in the narrow range of 15635 - 15900. This is a very narrow range. The upper boundary has been tested 4 times and lower boundary has been tested 3 times so far. This tells the range is about to mature and breakout is a strong possibility for this week.
Studying price action in the range is not very useful in my experience as clear trend is absent. Hence daily candle study is not useful.
Anticipating Monday
1. Thursday expiry was a shock for traders holding long positions. Friday was indecisive. This action actually gives no clear trend. But it clearly draws the leaves we can assume for the direction.
2. Gap up open above or cross of 15730 clearly signals reversal for two days action, and this time if it happens resistance of 15900 is likely to be broken.
3. Any close or slipping below 15630 is continuation of the down move.
More on levels and timelines
1. Looking at 75 Min chart, close below 15680 on 15 min chart , will be a signal for building bearish position.
2. Resistance is in the band 15760-15780, where there may be an attempt to stall the NIFTY in case of an up move or gap up.
3. In case of gap up, the real test and confirmation of the reversal is around 15820.
Open Interest Data
1. 15700 strike is like a battle strike where large CALL OI 2x of PUT OI. This gives important levels as 15770-15800. Support at 15590-15620.
2. Following other strikes, 15600 and 15800, important levels are 15540 and 15840.
Trade Plan for Monday
1. Not carrying any positions.
2. Flat opening inside Friday's range 15630-15730 :
a. Wait without any trade for range breakout and trade in the direction of the breakout. (15 Min timeframe)
b. Assume downward breakout and build Bearish Spreads (15750-15800)
3. Opening with Gap above 15730
a. If is below 15760, likely to pullback towards 15730 or even towards 15680. Check if pullback is bought and then initiate positional long with stop loss of 15680
b. If above 15760 and 15780, wait for first three candles and buy for target of 15830. That’s around 50 points. Stop loss being 15730
c. If gap up above 15780, may lead to short covering and may not give chance to buy. Wait for crossing 15840, fail there and when it crosses again, buy quickly. SL will be low of the day
4. Opening just below 15630 :
a. Wait for first 5 min candle and if trade can be entered around 15630, sell for target of 15550 with SL of 15690
5. Gap down below 15600 :
a. Wait for pullback towards 15600-15630, initiate positional short.
Possible option trades
1. Possibility 3a : Long 15800 CE or Short 15700 PE
2. Possibility 3b: Long 15800 CE
3. Possibility 3c : Buy 15900 CE / 16100 CE Spread
4. Possibility 4a : Short 15800 CE
5. Possibility 5a : Buy 15600/15500 PE Spread or Sell 15700/15800 CE Spread
Things to remember
1. Check open Interest for managing the trade
2. Follow the price action and trade only near the levels.
3. Check VIX
4. Use predetermined SL for intraday. For spreads wait till EOD.
Wish you a great trading day!