Saturday, April 23, 2016

Neutral on charts – Nifty View 25-29 Apr

Last week I had started newsletter with this sentence- "A short week ended on 13 Apr could bring Nifty to levels near 7900". I can start this week's post with the similar sentence, as Nifty closed where it opened a week ago. Still bear 7900. Nothing much during the week. We are entering in F&O expiry week.  
How to trade Nifty during expiry? 
Technical Overview: Last week Nifty made high of 7978 and low of 7842 to close at 7899. That was a small range of 136 pointsOn Weekly chart nifty formed a spinning top. Spinning top indicates neutral sentiments. Let me give a broader perspective here. Nifty is in medium term uptrend. Nifty is also trading at higher end of current move and price is near resistance 
Resistance is near 7972 and 8088 
A gap indicates support near 7772 and 7717 
My View: Here an anticipated correction move in Nifty can not be denied. However these corrections are difficult to trade. Best trade is to buy on dips near support or buy on breakouts. Hence in current scenario buy opportunity is either near support at 7772 or on break-out of 7972. However one should avoid trading during the expiry days if there is no clear indication. Clear indication can come on Thursday of Friday when option writers pocket out the profits. 
For aggressive traders- shorts can be created if Nifty breaks below 7842 which happens to low of last week.

Check the areas of influence marked on chart enclosed below.

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