Moneycontrol
Jul 16, 2017 06:25 PM IST

Trade Setup for Monday: Top 10 things you should know before Opening Bell

In a Hanging Man pattern, market witnesses a significant selloff in the beginning of the trade so the opening level becomes the highest point of the trade and then the index trades lower.

The Nifty pared gains after hitting fresh record high of 9913.30 and closed marginally lower on Friday making a ‘Hanging Man’ kind of formation on the daily candlestick charts.

A Hanging Man is a bearish reversal candlestick pattern that is formed at the end of an uptrend (400-point rally from its recent low of 9,450).

In a perfect 'Hanging Man' pattern, there is no upper shadow, a small body, and long lower shadow. The selloff is usually seen as an early indication of a short-term top being formed.

In this pattern, market witnesses a significant selloff in the beginning of the trade so the opening level becomes the highest point of the trade and then the index trades lower.

However, the pattern still needs confirmation and investors should wait for Monday’s price action before taking a call. Investors will be better off booking some profits now and avoid initiating fresh positions until new signs are available.

In Friday's price action, Nifty slipped from 9913.30 levels to 9845.45 which made a long lower shadow on the candlestick charts. The index finally closed 5.3 points lower at 9,886.35.

The Nifty closed below its crucial support level of 9900 and now a decisive close above this levels is likely to build momentum for bulls whereas a break below 9850-9823 could fuel bearish sentiment, suggest experts.

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 5.3 points lower at 9886.35. According to Pivot charts, the key support level for Nifty is placed at 9850.1, followed by 9813.85. If the index starts to move higher, then key resistance levels to watch out are 9917.95, followed by 9949.55.

Nifty Bank:

Nifty Bank closed 49.05 points higher or 0.21 percent at 23,888.7 on Friday. Important pivot level, which will act as crucial support for the index is placed at 23,807.83, followed by 23677.97. On the upside, the key resistance level is 24015.63 followed by 24093.56.

Call Options Data:

Maximum Call open interest (OI) of 45.64 lakh contracts stands at strike price 10,000, which will act as a crucial resistance level for the index in the July series, followed by 9,900 which now holds 45.02 lakh contracts in OI and 9,800 which has accumulated 31.2 lakh contracts in OI.

Call writing was seen at strike prices 9,900 (5.74 lakh contracts added), followed by 10,000 (1.17 lakh contracts added) and 10,200 (0.49 lakh contracts added).

Meanwhile, Call unwinding was seen at the strike price of 9,800 which saw shedding of 5.17 lakh contracts in open interest, followed by 9,600 (1.91 lakh contracts shed) and 9,500 (1.57 lakh contracts shed).

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Put Options Data:

Maximum Put OI of 62.58 lakh contracts was seen at strike price 9,600, which will act as a crucial base for the index in July series, followed by 9,700 which has accumulated 60.47 lakh contracts in open interest, and 9800 which now holds 59.34 lakh contracts in open interest.

Put Writing was seen at strike prices of 9,900 (20.53 lakh contracts added), followed by strike price of 9,800 (7.61 lakh contracts added).

Put unwinding was seen at the strike price of 9,400, which saw shedding of 5.67 lakh contracts in open interest, followed by 9,500 (2.82 lakh contracts shed).

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FII & DII Data:

Foreign institutional investors (FIIs) bought shares worth Rs 673.56 crore, while domestic institutional investors sold shares worth Rs 136.27 crore in the Indian equity market.

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.

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57 stocks saw Long Buildup:

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46 stocks saw Short Covering:

A decrease in open interest along with an increase in price mostly indicates short covering.

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42 stocks saw Long Unwinding:

Long Unwinding happens when there is a decrease in OI as well as in price.

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66 stocks saw Short Buildup:

An increase in open interest along with a decrease in price mostly indicates short positions being built up.

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