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Trade Setup for Wednesday:Top 10 things you should know

Yatheendradas C.k. at 05:26 AM - Jul 26, 2017 ( ) Views: 246

Jul 25, 2017 10:13 PM IST | Source: Moneycontrol.com

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

Traders are advised to stay long and initiate buy on dips strategy towards any fall towards 9,900 levels, suggest experts.

Moneycontrol News

The Nifty took 21 years to hit the landmark level of 10,000 in 2017 since it was launched in the year 1996. However, the index failed to hold on to gains and closed marginally lower making a ‘Bearish Belt Hold’ kind of pattern on the daily candlestick charts.

A Bearish Belt Hold pattern is formed when the opening price becomes the highest point of the trading day which in Tuesday’s trading session was a record high of 10011.30. After opening, the index then witnesses selling pressure throughout the trading session.

In this pattern, there is small or no upper shadow and the index declines throughout the trading day which makes up for the large body and a small lower shadow.

 

In Tuesday's price action, Nifty50 opened at 10,010.55 which was slightly below its record high of 10,011.30. Hence, there was no or insignificant upper shadow.

It slipped over 60 points to touch its intraday low of 9949.10 which made a slightly long lower shadow. The index finally closed 1.8 points lower from its previous close of 9,966.40 to 9,964.55.

Traders are advised to stay long and initiate buy on dips strategy towards any fall towards 9,900 levels. Don’t go short on the market, just yet because that still needs some confirmation.

However, investors could remain cautious and wait for the index to close above 10K on a closing basis to initiate fresh positions, suggest experts. For the momentum to continue, the index should hold above 9,928 on a closing basis.

We have collated top ten data points to help you spot profitable trade.

Key Support & Resistance Level for Nifty:

The Nifty closed above 9,950-mark at 9964.55, down 1.85 on Tuesday. According to Pivot charts, the key support level is placed at 9938.67, followed by 9912.78. If the index starts to move higher, key resistance levels to watch out are 10000.87 and 10037.18.

Nifty Bank:

The Nifty Bank closed 99.85 points higher at 24,520.70 on Tuesday. Important Pivot level, which will act as crucial support for the index, is placed at 24439.03, followed by 24357.37. On the upside, key resistance level is 24613.53 followed by 24706.37.

Call Options Data:

Maximum Call open interest (OI), of 73.86 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 10,100, which now holds 33.78 lakh contracts in open interest, and 9,900, which has accumulated 26.98 lakh contracts in OI.

Call writing was seen at strike prices — 10,000 (8.85 lakh contracts added), followed by 10,300 (0.46 lakh contracts).

Meanwhile, Call unwinding was seen at strike prices 9,800 (3.01 lakh contracts were shed), followed by 9,900 (2.89 lakh contracts shed), 10,100 (1.93 lakh contracts shed).

Image1

Put Options Data:

Maximum Put OI of 63.69 lakh contracts was seen at strike price 9,900 which will act as a crucial base for the index in July series, followed by 9700, which has accumulated 50.66 lakh contracts in open interest, and 9,800, which now holds 49.29 lakh contracts in open interest.

Put writing was seen at strike prices 10,000 (4.54 lakh contracts added), followed by 9,900 (3.88 lakh contracts added) and 10,000.

Meanwhile, put Unwinding was seen at strike prices 9,800 (9.14 lakh contracts shed), followed by 9,400, where 1.63 lakh contracts were shed along with 9,500 (1.05 lakh contracts).

Image2

FII & DII Data:

The foreign institutional investors (FIIs) bought shares worth Rs 270.77 crore compared to domestic institutional investors which sold Rs 209.5 crore worth shares 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.

Image3

114 stocks saw long buildup

Image4

3 stocks saw short covering:

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

Image5

1 stock saw long unwinding:

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

Image6

96 stocks saw short buildup:

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

Image7


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