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| Nifty may see a fresh correction around 5,522 |
| B G Shirsat / Mumbai Jul 15, 2011, 00:20 IST |
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A significant recovery from the day’s low of 5,546 to a high of 5,667 could be sustain as other time-frame traders turned net sellers at the higher level. The Nifty July futures closed in a Doji pattern with long upper shadow indicating presence of buyers and subsequent price up move attracted sellers.
A Doji forms when the opening price is the same or very close to the closing price. No indicative buy or sell signal is seen in this pattern but the market is telling that it is at balance.
As expected, the Nifty July futures maintained the lower end support at 5,550, but faced strong resistance above 5,650 on account of selling from other time-frame traders. The Nifty futures settled at a par to spot indicating short build-up at the higher levels.
There is not enough appetite in the market to signal a turnaround and, hence, we may see a consolidation within 5,500-5650. Nevertheless, the open interest (OI) build-up in the 5,500-strike put options and 5,700-strike call options suggested support and resistance levels.
The trade summary matrix (TSM) shows sell-side in trades in the initial balance (IB) range (5,546-5,578) and also in the value area (5,574-5,640) from top traders. The selling pressure was evident mostly above 5,590 when the market was moving up, recouping the early losses.
The 40 per cent volume in the last one hour of trades and the fall in price from the day’s high of 5,667 to around 5,585 indicate entry of new other time-frame traders who believe prices are above value.
The market picture chart indicates a price target of 5,515-5,507 for the Nifty July futures. The futures continue to face strong resistance above 5,650. The spot Nifty may see a fresh correction around 5,522 and an upside resistance is seen around 5,662. The 64 per cent TPOs above PoC 5,586 indicate price-based selling and net selling day and hence we may see strong selling pressure at 5,585-5,667.
The trading pattern in the Nifty put and call options hints at some confusion among participants. The trading data indicate profit booking in the 5,500 and 5,700-strike call options and fresh short build-up in the 5,600-5,700-strike put options.
The unwinding of shorts seen in the 5,300 and 5,000 strike put options and change of hands noticed in the 5,100-5,200-strike put options.
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