Trade setup for Friday: Top 10 things you should know before Opening Bell
Traders are advised to remain cautious and maintain a strict stop loss below 10,028 for all long positions.
The Nifty, which started on a flat note gained momentum, but remained volatile throughout the trade on Thursday, closed with marginal gains. It made a ‘Spinning Top’ kind of pattern on the daily charts for the second day in a row.
The index remained choppy for the most part of the trading session and finally closed with the marginal gains of 7 points at 10,086.60. It rose marginally to 10,126.50 but then witnessed selling pressure which took the index towards its intraday low of 10,070.35.
A Spinning Top candle is often regarded as a neutral pattern which suggests indecisiveness among both bulls as well as bears.
When a Spinning Top is formed in an uptrend, the one we are in right now, suggests that the buyers are losing conviction and a possible top could be in place, but it will still require confirmation.
The previous record high of 10,137 becomes an important level which bulls need to surpass in the coming sessions if they want to remain in control of D-Street. Traders are advised to remain cautious and maintain a strict stop loss below 10,028 for all long positions.
“It was a day of consolidation on the bourses as Nifty registered a Spinning Top kind of indecisive formation, for the second day in a row, after moving in a narrow range of around 50 points,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“This kind of indecisiveness on the part of bulls near the critical resistance point of 10,137 is a cause for concern. Hence, unless this resistance point is taken off in next trading session this rally may not get extended further there by paving the way for a fresh leg of downside,” he said.
Mohammad advises traders to remain cautious with a tight stop below 10,028 levels. On the other hand, any breakout above 10,137 levels shall extend this pull back rally up to 10,205.
India VIX fell by 2.47% at 11.47 and lower VIX below 12.50 is holding the market even on declines.
We have collated top ten data points on how to help you in spotting profitable trade:
Key Support & Resistance Level for Nifty:
The Nifty closed at 10,086.6 on Thursday. According to Pivot charts, the key support level is placed at 10,062.43, followed by 10,038.27. If the index starts to move higher, key resistance levels to watch out are 10,118.63 and 10,150.67.
The Nifty Bank closed at 24,912.2 on Thursday. Important Pivot level, which will act as crucial support for the index, is placed at 24,820.37, followed by 24,728.53. On the upside, key resistance levels are 24,999.17, followed by 25,086.13.
Call Options Data:
Maximum call open interest (OI) of 44.10 lakh contracts stands at strike price 10,200, which will act as a crucial resistance level for the index in the September series, followed by 10,100, which now holds 42.29 lakh contracts in open interest, and 10,300, which has accumulated 29.39 lakh contracts in OI.
Call writing was seen at strike prices 10,200, which saw the addition of 2.86 lakh contracts, followed by 10,100, which saw the addition of 1.61 lakh contracts and 10,400, which saw the addition of 1.13 lakh contracts.
Call unwinding was seen at the strike price of 10,000, which saw shedding of 5.36 lakh contracts, followed by 10,600, which saw shedding of 0.39 lakh contracts, and 9,900, which saw the shedding of 0.38 lakh contracts.
Put Options Data:
Maximum Put OI of 60.32 lakh contracts was seen at strike price 9,900, which will act as a crucial base for the index in September series, followed by 10,000, which now holds 55.76 lakh contracts and 9,700, which has now accumulated 48.44 lakh contracts in open interest.
Put writing was seen at strike prices 10,000 (5.86 lakh contracts added), followed by 9,800 (3.75 lakh contracts added) and 10,100 which saw an addition of 3.2 lakh contracts.
Meanwhile, Put unwinding was seen at the strike price of 10,500, which saw 0.83 lakh contracts being shed, along with 9,900, which saw the shedding of 0.37 lakh contracts.
FII & DII Data:
Foreign institutional investors sold shares worth Rs 1,334.23 crore, while domestic institutional investors (DIIs) bought shares worth Rs 793.31 crore on Thursday.
Stocks with high delivery percentage:
High delivery percentage suggests that investors are accepting the delivery of the stock, which means that investors are bullish on the stock.
113 stocks saw long build-up:
26 stocks saw short covering:
A decrease in open interest along with an increase in price mostly indicates short covering.
67 stocks saw short build-up:
An increase in open interest along with a decrease in price mostly indicates short positions being built up.
7 stocks saw long unwinding:
Long unwinding happens when there is a decrease in OI as well as in price.