On Thursday, Nifty opened Gap Down, and continued to slide to make a new short term low on daily charts. In the previous Nifty View, it was mentioned that Nifty may be in the process of making a Lower High. That view has been confirmed. In the process, the Stop and Reverse level of 5675, for aggressive longs taken on the breakout above 5720/5730 has been hit. Traders who took the short trade, should be in good profits now, and can start booking profits, and move their stoploss to around 5705 Nifty Spot level. Those who missed it, should now wait for the next trading opportunity. For the Bulls, there is positive divergence which is persisting in RSI on Nifty Daily charts. Apart from that, the line joining the Lows is offering some sort of support as of now, which can later turn into a bullish pattern. However, since the momentum is on the downside right now, it is better to wait for a confirmed signal from price, rather than taking a risk trade based on positive divergence alone.
The Nifty Option OI Charts are given below:
In the Nifty Option charts, the Bears dominated the day today. They added a huge quantity of 56 lacs+ Open Interest in Nifty Call Options of 5600 to 5800. On the other hand, Bears covered a huge quantity of 30 lacs+ in Nifty Put Options of 5600 to 5800. Overall, though Nifty has fallen below 5600, and despite the huge covering at 5600 PE today, Open Interest at 5600 PE remains the highest among Nifty Put Options. In Nifty Call options, 5700 CE and above strikes have added nearly 70 lacs Open Interest. Overall, the Nifty option charts indicate a trading range between 5600 to 5700 on Nifty Spot. Since Nifty is below 5600 Spot, the coming days trading should resolve this anamoly.
For Friday, immediate resistance for Nifty Spot comes at 5590/5595 levels. Above this, the next big resistance area for Nifty Spot will come at 5625/5630 levels. Only on a close above 5630 now, can the Bulls hope for some kind of a pause from the Bear onslaught. On the downside, support for Nifty Spot comes at 5565/5570 and 5550 levels. Below this, next major support for Nifty Spot comes 100+ points down around 5430, with minor support around 5520/5525 level.
5 Apr - Nifty Spot resistance at 5595-5625-5650-5700. Support at 5570-5550-5520-5435 - www.niftypower.com
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