Bank nifty opened at 39337 gap down right at the support level of 39330, made a small dip but held above this line throughout the day. At 12.15 and 13.40 BN tried to fill the gap but failed. Today's trade was in a short range if you look at the open and close. But the way the call options premium rallied, it shows heavy shorting. The call writers are expecting the bank nifty to break down. From the technical analysis BN is unable to break through the support levels so most likely the call writers may be wrong.
If a trader has shorted the call option and the market is not moving downwards - he loses the incentive to stick onto the trade. If he starts squaring up the position due to inactivity, the covering will trigger a bounce.
The put option volume traded is quite low compared to the call option - so there is a skew which has to normalize by the expiry tomorrow.
I was unable to post the analysis on 5th & 6th Sep as i had a family function and was not at desk to take the trades. However today i got the opportunity to participate.
5mts chart for previous days does not show a market that is breaking down. For any meaningful downward trend the yellow marked lines has to be breached either by gap down or via price action.
1hr chart also shows no sign of weakness.
Bank nifty important support and resistance lines
s1: 39330, s2: 38699
r1: 39738 (new resistance) r2: 40149
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