Moneycontrol
Sep 13, 2017 09:27 PM IST | Source: Moneycontrol.com

Trade setup for Thursday: Top 10 things you should know before Opening Bell

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 will still require confirmation.

The Nifty, which came within kissing distance of its previous record high of 10,137, came under selling pressure in the last 90 minutes of trade and closed below its crucial support level of 10,100 making a ‘Spinning Top’ kind of pattern on charts.

A Spinning Top candle is often regarded as a neutral pattern which suggests indecisiveness among both bulls as well as bears and can be formed in an uptrend as well as in a downtrend.

The Nifty opened at 10,099 and rose to an intraday high of 10,131.95. It slipped to an intraday low of 10,063.15 which made a small lower shadow. It closed 13 points lower at 10,079.30.

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 will still require confirmation.

The previous record high 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 10,047.

“The Nifty registered a Spinning Top kind of indecisive formation around its critical resistance point of 10,137 as it reversed the course of the day after almost retesting the previous high,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“As we have pointed out earlier, after Monday's trading session, that the rally from the lows of 9,685 is an upward corrective rally in nature but not a fresh leg of an uptrend and hence, it shall reverse its course of action from any point of time here after,” he said.

Mohammad advises traders to remain cautious and maintain tight stops for the trading positions which should be created only above 10,137 levels with a stop of 10,047. If the index manages to take off 10,137 levels then this pull back rally shall get extended up to 10,205.

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 10,079 on Wednesday. According to Pivot charts, the key support level is placed at 10,051.0, followed by 10,022.7. If the index starts to move higher, key resistance levels to watch out are 10,119.8 and 10,160.3.

Nifty Bank:

The Nifty Bank closed at 24,831.8 on Wednesday. Important Pivot level, which will act as crucial support for the index, is placed at 24,730.14, followed by 24,628.47. On the upside, key resistance levels are 24,941.14, followed by 25,050.47.

Call Options Data:

Maximum call open interest (OI) of 41.23 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 40.67 lakh contracts in open interest, and 10,000, which has accumulated 34.58 lakh contracts in OI.

Call writing was seen at strike prices 10,100, which saw the addition of 5.07 lakh contracts, followed by 10,300, which saw the addition of 3.15 lakh contracts and 10,200, which saw the addition of 2.87 lakh contracts.

Call unwinding was seen at the strike price of 10,000, which saw shedding of 2.76 lakh contracts, followed by 9,900, which saw shedding of 0.59 lakh contracts, and 9,600, which saw the shedding of 0.48 lakh contracts.

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Put Options Data:

Maximum Put OI of 60.69 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 49.90 lakh contracts and 9,700, which has now accumulated 47.78 lakh contracts in open interest.

Put writing was seen at strike prices 10,100 (10.15 lakh contracts added), followed by 10,000 (5.87 lakh contracts added) and 10,200 which saw an addition of 0.72 lakh contracts.

Meanwhile, Put unwinding was seen at the strike price of 9,800, which saw 3.45 lakh contracts being shed, along with 9,900, which saw the shedding of 2.46 lakh contracts along with strike price of 9,700, which saw 1.57 lakh contracts.

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FII & DII Data:

Foreign institutional investors sold shares worth Rs 826.77 crore, while domestic institutional investors (DIIs) bought shares worth Rs 725.9 crore on Wednesday.

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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35 stocks saw long build-up:

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31 stocks saw short covering:

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

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84 stocks saw short build-up:

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

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63 stocks saw long unwinding:

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

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