21 Aug - Nifty View

Nifty enters in a shortened expiry week, after having a Doji day on Friday. Doji's are generally indicative of indecision among the traders, and are considered as trend reversal patterns. A move outside at range of the Doji can lead to a breakout/ breakdown, with good momentum. Hence, it is also a good time to buy Option Straddles. On Firday, Nifty declined to take support near our reference level of 5345 Spot (actual low 5341), and closed around 5367 level. It also made the high point of this rally at 5399 level. Next week may well turn out to be a short term trend deciding level, when Nifty moves to close out of this range of 5340/5320 to 5380/5400. Positional traders who are Long can now keep a Stop and Reverse at 5320 Nifty Spot level.


The Nifty Option OI Charts are given below:



On te Options front, the Bulls added a small quantity of 12 lacs+ OI at 5300 PE and 5400 PE strikes, while covered 5 lacs+ OI at 5100 PE strike. On te other hand, the Bears did little action at the end of the day, which is surprising given the kind of fall Nifty had in the morning. Overall, 5300 remains the immediate string support for Nifty, while 5500 is an an equally strong resistance, having 90 lacs+ OI. 5400 is the 50:50 level between the Bulls and the Bears.

For Monday, immediate resistance for Nifty Spot comes at 5375/5380 levels. Above this, it will head for Friday's high of 5400. Sustaining above 5400/5405 can lead to some panic covering from the Bears, which can take Nifty to higher levels of 5445 and 5490. On the downside, support for Nifty Spot comes at 5345/5340 levels. Below this, it will slide to enter the recent low and support zone of 5330/5320. Below 5320, the Bears will have an upper hand, and they can Nifty further down towards 5295 and 5260 levels.

21 Aug - Nifty Spot resistance at 5375-5405-5445-5490. Support at 5345-5325-5295-5260 - www.niftypower.com

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