2 weeks Ago
Nifty now holds 26,000 and meets the confluence zone of 26,200 and the Street wonders if one could remain bullish as the reward to risk is stretched or a sensible dip can flush out weaker money to bring in momentum. The index formed a “three white soldiers” candlestick pattern on the weekly chart, which indicates a fresh momentum from the levels of 25,500 levels but after a prolonged stretch in the index, Nifty formed a small red candlestick on the daily chart ending the week on a muted note. “Index moved from contraction to expansion and a weaker close on Friday indicates a minor profit booking or sideways consolidation is on the cards,” said Shrey Jain, CEO and Founder of SAS Online.
The momentum on the higher side is indicating divergence when we notice the RSI, a momentum indicator, and breadth analysis. The number of stocks above short term key moving averages of 10-20 and 50 MA are seeing a divergence as they continue to decline. Nifty continues the uptrend on the back of buoyant cues and momentum but the confluence of levels suggests a sideways correction is much required.
The primary key resistance at 26200 is still intact while Nifty futures continue to trade on premium as well. Stock Trading Market 101: An Insight into Trendlines and Momentum By - Rohit Srivastava, Founder- Indiacharts.com View Program Stock Trading Markets 102: Mastering Sentiment Indicators for Swing and Positional Trading By - Rohit Srivastava, Founder- Indiacharts.
com View Program Stock Trading Market 103: Mastering Trends with RMI and Techno-Funda Insights By - Rohit Srivastava, Founder- Indiacharts.com View Program Stock Trading Market 104: Options Trading: Kickstart Your F&O Adventure By - Saketh R, Founder- QuickAlpha, Full Time Options Trader View Program Stock Trading ROC Made Easy: Master Course for ROC Stock Indicator By - Souradeep Dey, Equity and Commodity Trader, Trainer View Program Stock Trading RSI Made Easy: RSI Trading Course By - Souradeep Dey, Equity and Commodity Trader, Trainer View Program Stock Trading Technical Analysis for Everyone - Technical Analysis Course By - Abhijit Paul, Technical Research Head, Fund Manager- ICICI Securities View Program Stock Trading Introduction to Technical Analysis & Candlestick Theory By - Dinesh Nagpal, Full Time Trader, Ichimoku & Trading Psychology Expert View Program Stock Trading Options Trading Course For Beginners By - Chetan Panchamia, Options Trader View Program Stock Trading Options Scalping Made Easy By - Sivakumar Jayachandran, Ace Scalper View Program Stock Trading Futures Trading Made Easy: Future & Options Trading Course By - Anirudh Saraf, Founder- Saraf A & Associates, Chartered Accountant View Program Stock Trading Stock Markets Made Easy By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading Renko Chart Patterns Made Easy By - Kaushik Akiwatkar, Derivative Trader and Investor View Program Stock Trading Options Trading Made Easy: Options Trading Course By - Anirudh Saraf, Founder- Saraf A & Associates, Chartered Accountant View Program Stock Trading Stock Investing Made Easy: Beginner's Stock Market Investment Course By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading Macroeconomics Made Easy: Online Certification Course By - Anirudh Saraf, Founder- Saraf A & Associates, Chartered Accountant View Program Stock Trading Stock Valuation Made Easy By - Rounak Gouti, Investment commentary writer, Experience in equity research View Program The OI data points to a range of 26,500 to 26,000 for the coming week expiry since the concentration of CE at the higher side stands at 26,300 in short term and at 26,500 while the puts side indicates writing at 26,000 – 26,100. “Since IVs are at very subdued and low levels of 11.
25 which we have seen in August, we expect volatility may spike, at present IVs point to less than a quarter of percent move,” Jain added. Shrey Jain suggests an overall strategy of buy on dips for the Index but for the coming week's expiry, the broader range for Nifty is 26,500 – 26,000. However, since a spike in volume within a range is expected, Jain suggests deploying a neutral strategy with protected wings called Iron Butterfly .
Iron Butterfly Iron Butterfly is an options trade that uses four different contracts as part of a strategy to benefit from stocks or futures prices that move within a defined range. The trade is also constructed to benefit from a decline in implied volatility. ETMarkets.
com (Prices as of September 27) Below is the payoff graph of the strategy: ETMarkets.com (Source: SAS Online) ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel ).
