Nifty finally broke and closed below the much advertised level of 200 week SMA on Friday. Such highly advertised support and resistance levels usually get broken in the market. The wise thing to do is, Never look for Supports in a Falling market. Look for Resistances. If the market is able to take out the resistances, only then it the downtrend should be considered to have halted. A lot of traders tend to Buy at the Supports in falling markets, which eventually get broken. A better thing to do would be to Buy on breakout above resistance, with a tight stoploss below the breakout point. These resistances to look out for now are the earlier support levels.
The Options OI charts are given below:
From the Open Interest charts, support for Nifty comes at 5700 and below levels. 4800 is a minor support level (surprising since Nifty is below the 4800 level as of now). 4900 is the 50:50 level and 5000 is a minor resistance. We would let the ranges develop over the next week. NExt week being a shortened week, lot of Option writing and decay in Option Prices is expected to happen. That would also give a much more clear picture on the starting range for the September series.
For tomorrow, immediate resistance for Nifty Spot comes around 4795-4800 levels. If it manages to sustain above this in morning trades, it will target higher levels of 4845 and 4890 levels. On the downside, support for Nifty Spot comes at 4720 level. Below this, next support to look out for are 4675 and 4645 and 4605. The bias for the day would be negative as long as Nifty trades below 4780 tomorrow.
29 Aug: Nifty Spot resistance at 4795-4820-4845-4890. Support at 4720-4675-4645-4605 - www.niftypower.com
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