Put writing was seen at 10,650 and 10,700 strike while Call unwinding was seen at 10,800 and 10,900 strikes. Option data suggests an immediate trading range in between 10,700 to 10,835 zones.
The 50-share NSE Nifty recouped early losses and traded higher for major part of the session but failed to hold 10,800 levels on Tuesday. The index traded in a range of about 70 points and made a small bullish candle on the daily charts which also resembles a ‘Shooting Star’ kind of pattern with a long upper shadow.
A ‘Shooting Star’ pattern is formed when the index comes under selling pressure as traders start booking profits at higher levels. This pattern is usually formed in an uptrend and is treated as a reversal pattern, but it would require confirmation before we can conclude that the trend will get reversed in near future.
The Nifty index opened at 10,742.70 and slipped to an intraday low of 10,732.55 but then bulls took charge and pushed the index back above 10,750. The index made an intraday high of 10,805.25 before closing the day 6.70 points higher at 10,769.15.
Experts expect the rangebound trade to continue for the coming session as well. Nifty needs to break the range of 10,837–10,710 on either side to accelerate momentum on either side, they said.
“Nifty50 continued its lackadaisical way of trading as it remained choppy and volatile in a narrow range of 73 points before signing off the session with a small bullish candle. Though this candle resembles a shooting star with a long upper shadow, owing to intraday profit booking, this pattern has no special significance when it forms inside the lower end of the narrow consolidation range,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.
He said in fact it appears that price range for last two sessions is confined inside the bullish bar registered on last Friday giving rise to Inside Bar kind of formation within a range of 10,837–10,710. “Hence, for a directional move to occur Nifty50 need to close outside this range in either of the direction there by paving the way for trading opportunity in the direction of the breakout.”
Meanwhile traders can shift their focus on available individual trading opportunities, he advised.
“The short term trend of Nifty continues to be choppy, and the range movement is expected to continue for next session,” Nagaraj Shetti, Technical Research Analyst, HDFC securities said, adding the range expansion on either side is likely to accelerate momentum on either side.
India VIX moved up by 1.73 percent at 12.80 levels. On the option front, maximum Put open interest (OI) is at 10,700 followed by 10,600 strike while maximum Call OI was at 11,000 followed by 10,800 and 10,900 strike.
Put writing was seen at 10,650 and 10,700 strike while Call unwinding was seen at 10,800 and 10,900 strikes. Option data suggests an immediate trading range in between 10,700 to 10,835 zones.
Nifty index got stuck in a broader range in between 10,700 to 10,835 zones from last nine trading sessions. “It failed to hold above 10,800 and formed a contradicting pattern indicates that bulls and bears both are not ready to give up. It formed a Doji candle or a Pin Bar in the last week but failed to hold above the same and again got stuck in range,” Chandan Taparia, Associate Vice President | Analyst-Derivatives, Motilal Oswal Securities told Moneycontrol.
He said now the index requires a decisive range breakout above 10,835 or below 10,700 zones to commence the next move. “If manages to hold above 10,835 then only up move could be seen towards 10,888 then 10,929 while a drift below 10,700 zones could take it towards 10,660 then 10,620 levels.”
Bank Nifty, which got stuck in a broader range in between 26,250 to 26800 zones from last 14 trading sessions, closed flattish while decline was bought with the support near to 26,500 zones, Taparia said.
It has to hold above 26,500 zones to witness an up move towards 26,750-26,800 zones while a hold below 26,450 could see a dip towards 26,250 zones, he added.
