Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

Nifty Futures – Extreme Negative Sentiment

1 min read

Nifty Futures last Friday has broken the 5-day balance and managed to trade below the 5-day balance. Though breakout failure is seen during the middle of the day value formed lower overall.

Couple of Interesting nuances one can gather from the daily charts

1)Current swing has 3 gaps which is an indication of emotional momentum sellers are likely controlling this market.

2)Nifty Future nearing the scen of crime level 10700 band and last friday start filling the Scene of crime zone.

3)10 Day Daily Volatility is increasing to 227 levels

Extreme negative sentiment is visible on the daily charts which is the indication that in terms of time the bottom is likely. As trading emotions are running high among the sellers its good to have a wait and watch approach to trade the longs.

One need not to fight for longs immediately however when more and more emotions are spotted on the profile structure, in that case, buy on dips mode would be preferred as very rarely emotional traders take their money back to their home.

VIX fears are at the extreme and implied volatility shot in the last couple of days due to ongoing corona virus fears , Yes Bank Crisis & Saudi Oil Vs Russia pricing war on oil, Bond Market Yield Collapse.

What the Short Straddlers are doing?

Volatility increased and so the options short-sellers starts demanding higher risk premium. And the weekly option writers are looking for a possible range between 10720 – 11280 levels. Naked Option Sellers might be hedging their positions if that range is likely to be broken either side.

Overall in the next couple of days, the max upside view is limited to close of the gap i.e 11220 and immediate odds are there towards the downside reference 10700 levels.

However on Monday morning if Nifty Futures fails to open gap down is a sign of strength and one can start trading towards 11220 levels. Short term inventory goes to the extreme and sellers are trading in an emotional phase where has a higher odds of positional short term trend reversal possible towards 11280 and 11400 (positionally).

Holiday on 10th March affects the weekly options premium and hence I would prefer to go with intraday longs/ intraday shorts and possibly positional longs are preferred either in the second half of Monday or around Wednesday open.

Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

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