It really looked like a short-selling setup as the bull momentum faded out after 11.15 — we went up 1.46% ~ 622pts today but it really felt like the thrust to go up further was missing. I am still not denying that the medium term trend is still bullish — but the overhang of the selling of Friday is still in the hunt.
5hr 50mts i.e barring 4 5mts candles, the rest of the trade was in a narrow range 43171 to 43390. I got the feeling that the bulls & bears has not really negotiated who is winning, thats when I checked the FIB levels.
Banknifty made 670pts jump in the opening 45mts of which 537pts ~ 80% of the move came inside 20mts — looks like a short covering rally. The squaring off of short CE positions were evident in the opening minutes and whoever had taken those positions overnight would have been rewarded quite well.
But most of them would not have expected the range bound trade to follow after the initial spike. Since its Finnifty expiry tomorrow, there was no sign of new positions getting created to play. Guess the participants were happy to leave banknifty alone today.
15mts TF may have dented the hopes of few weak bears today as 2 resistances were taken out i.e. 43012 & 43253 — which leaves banknifty at a similar level as on 03 May. And most of you would remember what happened on the next day — the mighty rally of 372pts to close the ATH gap.
1hr even though bullish has to answer this question, will the next few sessions take banknifty below 42576 to create a lower low & make today's level as a lower high?
Or will it zoom past 43750 to nullify the blip that just got created. On 5th we discussed the possibility that the news/event driven trade spoiling the technical analysis. So now we need to wait till sanity returns (mostly we will get it right on 9th May during Finnifty expiry)
Nifty50 is not looking bearish at all, its more positive than banknifty and is showing more willingness to go to 18419 levels soon. Now we all know only 1 outcome is possible — and banknifty has more than enough strength to cancel out nifty50's plans too.
In depth technical analysis done on bank nifty index & option trading strategies used in the last 183 trading days…amzn.to
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