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Trade Setup for Friday: Top 10 things you should know

Yatheendradas C.k. at 05:43 AM - Aug 04, 2017 ( ) Views: 341

Aug 03, 2017 09:20 PM IST | Source: Moneycontrol.com

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

Traders preferred to book profits ahead of the weekend but analysts do not see the correction extending beyond two trading sessions

Moneycontrol News

The Nifty closed marginally above its crucial support of 10,000 on Thursday and made a ‘Bearish Belt Hold’ kind of pattern for the second day in a row as bears took control of D-Street from the word go.

A Bearish Belt Hold pattern is formed when the opening price becomes the highest point of the trading day, which in Thursday’s trading session was 10,081.15. After opening, the index witnessed 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.

 

The index slipped over 80 points from its opening level to touch its intraday low of 9,998.25 which made a slightly long lower shadow. The index bounced back from its 10-day exponential moving average placed at 10,010 to close at 10,013, down 67 points.

Traders preferred to book profits ahead of the weekend but analysts do not see the correction extending beyond two trading sessions. The index has very strong support near its 10-day exponential moving average (DEMA) placed at 9,985.

A break below 13-DEMA could fuel further profit booking with the index declining towards its next support of 9,930-9,950 levels. Investors are advised to pare long positions and tread with caution.

A trend reversal could happen if the index closes below its 13-DEMA convincingly which has acted as crucial support for the index so far in the year 2017.

“The Nifty50 registered ‘Bearish Belt Hold’ formation for the second day in a row as it witnessed selling pressure from the word go. In this process it also broke its 11-day ascending channel with multiple touch points on lower time frame charts which are projecting a downside target close to 9,916 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

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

Key Support & Resistance Level for Nifty:

The Nifty closed at 10,013.65, down 67.85 points on Thursday. According to Pivot charts, the key support level is placed at 9,980.9, followed by 9,948.1. If the index starts to move higher, key resistance levels to watch out are 10,063.85 and 10,114.0.

Nifty Bank:

Nifty Bank closed 380.15 points lower at 24,675.05 on Thursday. Important Pivot level, which will act as crucial support for the index, is placed at 24,528.07, followed by 24,381.03. On the upside, key resistance level is 24,913.67, followed by 25,152.23.

Call Options Data:

Maximum Call open interest (OI) of 41.09 lakh contracts stands at strike price 10,500, which will act as a crucial resistance level for the index in the August series, followed by 10,100, which now holds 40.81 lakh contracts in open interest, and 10,200, which has accumulated 40.07 lakh contracts in OI.

Call writing was seen at strike prices — 10,100 (7.23 lakh contracts added), followed by 10,300 (6.39 lakh contracts added) and 10,500 (4.67 lakh contracts added).

Call unwinding was seen at strike prices 9,500 (0.82 lakh contracts were shed), followed by 9,900 (0.36 lakh contracts shed) and 9,800 (0.23 lakh contracts shed).

Put Options Data:

Maximum Put OI of 50.09 lakh contracts was seen at strike price 10,000, which will act as a crucial base for the index in August series, followed by 9,800, which has accumulated 42.26 lakh contracts in open interest, and 9,900, which now holds 39.33 lakh contracts in open interest.

Put writing was seen at strike prices 10,000 (1.7 lakh contracts added), followed by 9,700 (0.63 lakh contracts added) and 10,500, which saw an addition of 0.26 lakh contracts.

Put Unwinding was seen at strike prices 10,100 (1.46 lakh contracts shed), followed by 9,600, where 0.74 lakh contracts were shed along with 9,800 (0.73 lakh contracts were shed).

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FII & DII Data:

The foreign institutional investors (FIIs) bought shares worth Rs 24.07 crore, while domestic institutional investors sold Rs 389.34 crore in the Indian equity market 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.

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29 stocks saw long build-up

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36 stocks saw short covering:

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

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80 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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70 stocks saw Long Unwinding:

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

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