We have had a tiring three days of trading in the Nifty futures, with the market refusing to move beyond an established daily range and two sided movements in the markets.
Indeed strong initiative activity has been met by strong responsive activity on both sides yesterday and today.So whilst yesterday’s initiative seller was met by responsive buyers, today’s initiative buying has been downed by responsive selling.
If we merge all the three profiles, we get a sense of where the distribution has been happening.
Incidentally we are still around the 5900 spot level we spoke about two days earlier
That’s the power of the point of control . It tends to attract all prices to itself.
But let’s look a little beyond the POC and try to understand what the chart would be doing in the next two days.Whilst it’s always hazardous to guess a break out of a balance zone, a closer look inside the profile shows range extensions on the south side, one unsuccessful and another successful ( today’s profile) which would try to indicate a shift in the market sentiment at current levels.Clearly the smart money seems to be moving out at higher levels.
Let’s also look at this next chart :
It’s a 5 day chart for the entire distribution above 5830 and does seem to indicate that there needs to be more work done at 5860 levels.If 5860 does not hold then the market will rush down to 5815-20 from 31/3.
If I am wrong about this, then NF should stabilise above 5940 tomorrow and go on to meet 5976 and 6015.
It’s a balance profile after 3 days, which actually is a 50-50 , but internals say that sellers have an edge.
Our conflict of interest for a bias to trade today has been resolved with the market choosing point 3 in the update of yesterday
The chart was for the Nifty spot against the regular NF chart which we generally put out, but it was intersting to note that NF was at 5935 yesterday in the afternoon when spot hit 5900 and 5916 this morning when it did the same.
Regardless, we trade off the chart we see and our levels still are good irrespective off the movement of the spot v/s the future. At 12.30 Nf is trading at 5890, having hit 5880 off the weakness we mentioned would come below 5932 today.
The chart is annotated and self explanatory.
The point of interest would be to see if there is a visit to 5960 and to check for evidence of responsive buying there.
Above 5905, we will see day highs again.
here is a daily bar chart establishing the downtrend from 63xx levels to 51xx levels.
A composite profile of daily prices is drawn across the chart.
There are two profiles, one for the entire down move from early November to the mid feb lows and the second pne from 5177 to current prices.
As can be seen prices closed near the point of control for the entire down move at 5900-05 spot.
The rally from 21st march is still running strong and there is no signs of any visible weakness on charts.
That is on the daily level.
However on an intra-day basis, for tomorrow, we have a conflict on our hands
1) resolution of the balance zone 5835-5880 has been to the upside, suggesting more upmoves. Incidentally the balance zone produced a 86 point upmove at today’s closing prices based on NF.
2) we had a Double distribution day today which is also a sign of continuation.
3) The profile however also throws in a 3 I day, which is generally suggestive of capped up-moves at least till the last hour of the day.In a 3 I day, the highs are usually made within the first 60-90 minutes of trading.
Hence for tomorrow, if we do open and stay above 5959 in the first hour, I see a move to 5985 NF and 6012 NF, within the hour.Weakness will be on a break of 5932 towards 5905 and 5880.
For the upmove to continue, NF should not trade below 5880 tomorrow.
On april fool’s day, we start a new series with a pressing question on whether the move seen in the last half of march would continue to 6040 or we would see a revisit to 5550/ 5650.
We are currently working a balance zone between 5835 and 5880 with an excess both sides being rejected in the past two days.
The resolution of this balance zone will set up the next high probability trades.
Clearly the month of March was different from the past five months as we witnessed a stop in the one time frame movement seen from the start of November.
The current levels which are above 5800 seem to suggest that the downmove has been nullified and we are working our way back up to 6300 levels again.For this to be possible we will have to close out April above 5800 also.
The chart illustrates the buying seen above 5550 levels and continuation above the red line in the second pane will signify more buying interest.
However if 5800 breaks then a 100 point drop to 5700 is on the cards.