In our previous analysis I have discussed that PE buying is happening at the 23,900 strike and aggressive CE writing at 24,000 strike price. I discussed this yesterday as well, 24,100 is a strong resistance zone and Nifty will not be able to cross it. Now the strong resistance has shifted to 24,000.
Today Nifty opened Gap Down of 200+ points and after the market settled, we sold Nifty at 10.12AM when Nifty was trading at 23,620 with a SL of 23,680-23,680 for a target of 23,450-23,500.
At 11.13 AM our SL was triggered and we exited the trade at 23,680.
After exiting the trade, we didn't any fresh trade. Since the last two weeks we were continuously short and we captured a very nice move on a positional basis. We took a light position today since it was a risky trade as there was a danger of dead cat bounce, but we went with the trend.
We have published an article where we have discussed about the monthly derivative analysis and Nifty has almost completed the targets, you can read it HERE
Price Action:
Where Nifty closed is okay, and technically it's a weak closing at 23,767. As we have discussed few days ago that the 24,000 and 24,100 base was broken and this has become a strong barrier zone. Since the last 2 consecutively month closing for Nifty was below 24,000, this is a very negative for Nifty.
If you analyse the chart on daily timeframe. Here is a formation 3 DAY RULE pattern in Price Action. This is very negative pattern, this pattern's intensity is very much and it indicates a 1500-2000 point selling pressure. In this pattern candle type doesn't matter and there is a continuous formation of lower low in candles, and the body of the candle sticks doesn't touch the previous day low. This pattern indicated about the end of a trend and as this pattern is formed near the 24,200 level so the selling pressure can intensify further.
Again I am again saying to trollers who present themselves to spew filth, I am clearing myself out that I am not giving any targets or levels or trying to speculate, I am just trying to make you understand the nature and detail about the candle stick pattern.
We have discussed in our previous analysis about Neutral zone. 23,680 is a very strong neutral zone, neutral zone are technically the zones where bulk of the positions are concentrated i.e. having a high liquidity and these are not resistance or support zone.
Whenever there is a breakdown or breakout of 23,680 then we can see a sharp and sudden spike due to the availability of very high liquidity. Today there is testing of liquidity, and intraday you must noticed that there was a sharp up move in the morning when Nifty crossed this level. This was a dead cat bounce as market was falling one way, In this bounce volume was completely missing so this was not a sustainable upmove. It depends upon you how you view this but according to my analysis this was a Dead Cat bounce.
In the last two years Nifty has consolidate a lot in the 23,500-24,200 range and also since the last three months Nifty was still trading in that range.
This time you can see that after the earnings sessions of the Large Caps was over there was formation of 3 DAY RULE. The Large Caps earnings growth in Nifty 50 is not more than 2-3% and we didn't see wow results in the results of the companies and since the two years its stagnant without any signs of improvement.
If we align the data with price action then this time we can see a breakdown of 23,300-23,500 range. If we get closing below 23,680 on a closing basis then a fresh downside risk will open in Nifty due to which Nifty can decline towards 23,000 level, but closing is important after that we can get indication about direction. Incase there is any signs then I will update it on Dicey Trade.
FII and DII Data:
The positive FII buying figure that we have seen this month is due to Bulk deals and Block deals and if you see in this month there is a interesting thing, and the FII's have become net sellers and including today's selling figures they have sold 11,736 CR. In this month we saw the lowest buying figures of DII's since last 18 months and in this month of July they have purchased worth 30,117 CR which is quite surprising since on an average they buy around 70,000 CR to 80,000 CR since last 1 year. Which is indicating less buying interest and a liquidity crunch from the DII's as they provide cushion to the market as from 1st July RBI has tightened collateral rules for Banks to lend money, this is probably reason for less buying.
Options Data:
Nifty has closed above 23,700 definitely and on this strike price there is aggressive short position with heavy volume and OI spurts which makes it difficult for Nifty to hold 23,700 level. On OTM strike 23,600 on ATM strike 23,700 and ITM strike of 23,800 we see heavy PUT buying.
On the ITM CALL strike prices of 23,400--23,500--23,600 we saw long positions closed(long unwinding) with a heavy loss, which shows the Bears are tightening their grip in the upcoming sessions we can see selling pressure further intensify which can decline Nifty towards 23,000 level, but for that 23,600 is very important and how price action behaves around that level.
If we analyse the Futures data then there is turnover increase, and number of contracts traded has become extreme and volume has increased along with it OI has decreased which is indicating towards heavy long unwinding, since only 2 trading sessions left in this month's expiry so the short positions are being rolled over to next months expiry so you can say that Futures data is intact on negative side.
Important Note To Keep In Mind:
Whenever we post derivative analysis, it's a unbiased analysis and we don't include any type of news, this analysis is purely based on the options contract data and Futures contract data from the NSE's website and this doesn't make any sense to write this again and again, old members who frequently read our analysis already know this.
This analysis has been done after the market close, since this is done post market close, this cannot influence any kind of BUYING/SELLING activity.
Market is dynamic, and data changes depending upon the IV, volume, OI, buying/selling activity so it doesn't mean that market will behave exactly like this.
Many people who are biased due to BTST/STBT positions should completely ignore this analysis as I could be 100% wrong.
Disclaimer:
We don't consider movement of Gift Nifty in our analysis.
This analysis has been done after the market close, and it is entirely my personal view. This analysis can be 100% wrong and does not promote any type of buying/selling activity.
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