Month: February 2011

Yes, that where we ended in the Nifty and the Bank Nifty today, on the edge of balance.

I’m of course referring to yesterday’s post and the balance zone of the past three days. Many times a composite profile takes more than a day to resolve ( if it has to) as it has been developing over a few days.

So Buyers pushed sellers to the brink, but could not topple them over, though the OI data will show a lot of short covering, but they are still around.

The red rectangle is the break up of the profile chart of yesterday.Once price reached the top of the development, there was hesitation at the previous single prints and a bell shaped distribution started which was an indication to part book longs from lower levels on an intra basis.

In the bankNifty, there was a little enthusiasm above the 10715 level, which was the region to shut off new buying for the day.

The red rectangle is again the 3 days of this week on the left and the profile of today shows development again in the single prints.

So what is the message the market is trying to send here :

!) From the chart above, it is clear that any weakness at the open tomorrow will send the market down to the centre of the zone currently near 5478 levels.First sign of that happening will be a convincing break of 5523 tomorrow.

2) If we have to look the other side and we have a strong open, then it means a break of the three day balance which will bring 5577, 5625 and later 5677.

Here’s a daily chart of the future :

5625 is the zone of previous selling as also the zone of the 200 DMA. Since the market has a lot of people who trade on parameter based indicators as opposed to market generated information, one can expect this level to be over-run and 5677 attempted.But nevertheless between 5625 and 5677 the real test on the upside for the market will happen.

The Open holds the key again for tomorrow.


On the edge of balance

Before the last hour got underway, we were seriously looking at a close above value high , which would have given the buyer a small foot in the door to reverse the large downtrend we have been witness too.

The news driven last 30 minutes sell-off destroyed the balance developing in both the Nifty and the Bank Nifty in terms of market structure.

But a closer look at the weekly action so far in both indices reveals this :

Nifty :

Bank Nifty :

I last commented on the importance of balance in this post made on 26th Jan and also an earlier post

The action can be compared to a similar one between 5640 and 5840 earlier.In both cases the movement is random which can be frustrating if you are looking for a directional move in the market.

The balanced profile tells us that buyers and sellers are accepting the new price for auction and generally one can expect two way movements in the market during this period.

Also the profiler is on the watch-out for initiative activity out of the balance zone which are highly profitable trade set-ups.

To close, here is the updated Order Flow from the morning :

Nifty :

Reliance :



Mkt is still in balance..waiting.

When you get a gap up, there is always a question mark on whether the gap will be closed or whether there will be continuation.

That dilemma to fade the gap or not to was deliberated at the open this morning.

So far this morning we have done well to stay with the gains and at the time of this post we have made it to the 5504 level, the scene of yesterday’s breakdown.

OF is still blue off the open, but we have booked part longs near 5504.

Also we are introducing Reliance OrderFlow and SBI Order Flow charts to our trading room.

With lot sizes of 250 and 125, these will be handy instruments to trade on OF.

This is the morning action so far :

Reliance :


Looking ahead to the day in the Nifty, we are waiting to see the auction process develop over 5505-5513 for yesterday’s highs or whether 5466 lower down is protected.

The Bank Nifty is trading around the 3 day balance area of 10560 and will rotate here.Remember it is an inside day in the BN and a break-out will be an interesting development.


Nifty Intra Update