On the daily timeframe consolidation is seen for the last 7 trading sessions. Both Nifty Futures and Bank Nifty Futures are showing an intraday selloff in the first half of the session followed by second half of intraday recovery from the bottom for the last 7 consecutive trading sessions. And moreover Nifty futures is currently at the visual resistance zone @ 8835. so far Nifty Futures is struggling to close above this visual reference level.
Bank Nifty monthly charts shows a clear breakout from the consolidatation and also nearing 52 week high as well. Still the FEB 2017 series has 12 more trading sessions to go. Its early to confirm that trend is up on the monthly charts however to be noted bank nifty never closed above 20400 levels on the monthly closing basis. Requires a strong trigger to close above 20400 on monthly basis.
Bank Nifty since the start of Jan 2017 had done a 1000 points+ recovery and moved up without much rotations on the daily charts. Trading Sentiment remains positive for the weekly timeframe as well as daily timeframe. However trading sentiment on the daily timeframe is at the extreme which could bring short term corrections or volatile sideways action.
Metal Sector is showing similar breakout patterns if you just look from the short term perspective. Yes there is a clean breakout from the consolidation. But hey, lets look into the bigger picture. The bigger picture talks about how emotional a particular sector/stock is. To track emotions we can use gaps
Nifty had done a “W” shaped price pattern so far during Nov 2016 to till date which is very much visual from the charts. Currently price is trading around the Intermediate resistance zone 8315 levels as Sentimental RSI is currently at the extreme. Previous Top Down Analysis indicates that still price is showing a consolidation pattern in both Daily and Weekly Charts.
Top Down Approach provides us the macro visual perspective of the market participation. We will start with monthly charts to understand the long term participation, weekly charts to understand the intermediate term players and the daily charts to understand how the shorter timeframe players are behaving.
Nifty and Bank Nifty Daily Charts with Twiggs money flow indicator (Smoothed version) indcates that a possible turn around from the bottom and shorter term bullishness could continue despite slowdown in IIP numbers. India’s industrial released post friday trading indicates that output fell the steepest in 3 months by 1.9% in October from 0.7% expansion in September. If any negative jerks in the market due to those news factors could last only for a very short duration.
As a trader worst thing one can do is anticipating trend all the time. When a trader anticipates a trend but rather market does a sideways action if often frustrates a trader and often leads to take wrong decisions throughout the sideways phase. This week lets analyze the weekly sentimental data points from Nifty and Bank Nifty Futures.
Too much of consolidation in Bank Nifty Futures weekly charts indicates the age of the trend is getting too old. Old trend doesnt mean that it will be come an end but from the investing stand point it many not be worth taking a risky investment bet especially if you are a medium term investor. Trade Longs in Bank Nifty are Absolutely Fine from Day trading or Short term investing perspective
We know that Open Interest is nothing but the total number of outstanding contracts. And for Options we have Open Interest for every individual strike price. It is a myth that 90% of the option expire worthless. Textbooks, Internet & even most of the option experts preach that option writing is smarter than buying options . But is that true?
If you are a professional future trader in the markets then transaction cost plays a major role while trading. Lower the transaction cost translates to better returns and also reduces the risk to greater extent in the long run. By constructing a Synthetic Futures (Long/Short) we can reduce the total transaction cost by two-third of the actual instead of trading the futures.