Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Nifty Hedged Futures – October Series -Long Liquidation Odds?

45 sec read

Nifty hits 18000+ levels on an intraday basis. However, the second half of the day price managed to drop from the intraday high and nifty made a pullback low from the intraday perspective. Not much enthusiasm post Nifty hitting 18000+ levels and last Friday RBI Policy announcement day Nifty traded with thin volume.

The above combination of information indicating a potentially overheated market as the commitment from the buyers are slowly reducing and rather sellers could take control of the market if the price manages to sustain below today’s late pullback low.

More time spent above the pullback low i.e above 17960 invalidates the bearish view

Downside weaker references are around 17600 and 17500 odd levels.

Top Down Analysis

QuickFlip Fat Tail and Inference

This quick flip long signal with fat tail is now almost 2.5 months old aka 353 trading hours and by any means, it is in the top 2 percentile historically. What does that mean is chances of sustainable longs continuation from hereon is a questionable one and historically most of the mean reversion happened from here. A sell signal could hit the 17500-17600 odds

How to trade the view?

In order to control the upside risk, one can consider hedging the Nifty Futures with an OTM Put option. And manage the risk appropriately.

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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