Analysis and Trade Plan - 17 January 2020
Dow Jones was upbeat yesterday and making record highs everyday.
Nifty and Bank Nifty are broadly bullish that is why every bull run on lower time frame is swift than any bear run. Given that the view I posted on twitter and telegram channel panned out accordingly. I said a major top at 12410.
Today SGX Nifty is down by 20 points and question stands what we should do this week.
Last three days were consolidating days. If go by pure data, then there was long buildup and short buildup. It was by nature of small closing and increased OI but since it is in tight range, it does not give any clue on direction it is built on.
The way OI is built up in minor range, I would like for a breakout above 12410 or 12320 to build any bias.
For current week, max calls are written at 12400 and max puts are written at 12300. Break of any of these also sync with our technical levels.
On monthly expiry, max calls were written at 12500 and max puts were written at 12400.
Divergence is still playing out on RSI. Either the upper trend line will be broken and market may move up. Till that, I will not go long.
MACD has gone positive which is counter to what we are getting on RSI. So either of them is right. When both give the same direction, then it would be wise to initiate a trade. Till then, it is better to remain out.
There is divergence on 30 minute chart of Nifty also.
In conclusion I am waiting for Nifty to break channel of 12320 to 12410 to take further direction.
Bank Nifty is already weak as divergence is playing out. Below 31740, one can initiate short positions. 31500 can be first target.