Nifty Review of the market movement. Analysis of Options data

Here is a quick update on what on the trading charts that we have discussed two days back. It was spot on swing trade with respect to that level. Let us discuss what is in store for the upcoming sessions.

The other day we posted that Nifty Future has resistance around 5960 levels. We mentioned that all pullbacks to that level will be shorted.  Nifty on 24^th September made a high of 5962. We also mentioned that Downside target emerges at 5810-40 zones. Market today found support at 5820 and retraced back from there.

Our swing traders were short at the break of the 5960 levels and exited at 5840 just in line with the trading levels posted.

Immediate hurdle lies now at 5905 levels and trading above that markets will try to retrace back to the trading levels of 5960 on the upside. On the downside it will be better to try pull back trades on dips with stops at 5810 levels.

Fresh short trades will again be active in case Nifty future manages to close below 5800 trading levels.

Here is also an analysis and review of what the options data are suggesting since we are nearing expiry options accumulation along with price point analysis provide good levels for low risk pull back opportunity and some fantastic break out opportunities.

Here is a look at the options chart:

NIFTY OPTIONS ACCUMULATION- 25 SEP-2013

Nifty has terrific accumulation at 6000 zones.  This suggests that it is the toughest resistance zones. Hence swing traders can look to short on pull back to that trading levels. Similarly support lies at 5700 and 5800 trading levels and this will offer support zones to the market on the downside. A breach of 5800 can trigger a slide to test 5700 levels in a short time.

Nifty Outlook. Where are markets headed. Trading zones at these levels

Nifty futures have corrected sharply for the last few sessions. Some of it was triggered by a news based move and part of it coinciding with classical divergence patterns combined with price point analysis.

Here is a look at what has happened on the charts and where are we headed from here. NIFTY is approaching interesting levels here. Here is a look at the hourly charts of Nifty and an analysis of it.

NIFTY FUT SHORT TERM SWING CHARTS

Nifty has displayed a classical divergence pattern with RSI where RSI failed to make a higher high despite markets moving here. Once it failed to breach 6180 there was a look risk contrarian trade opportunity near that levels.

Since the crash that we witnessed post the RBI news NIFTY has been falling with a descending pattern across a channel. The channel low is now at 5840 zones.

The trading levels of 5840-5810 is also a support range to watch out for . swing wise this will be the key level to watch out for. This may provide a low risk contrarian opportunity.

A breach of that level can lead to a test of 5745 and 5640 on the lower sides. On the upside resistance remains at 5960 trading zones and any pull backs to that level will be resisted.

Only if NIFTY Fut manages to  close above that level can ensure a reversal of the down ward swing and a resumption of the upward move. 

Gold critically poised. Where is it headed. Trend outlook for Gold

Here is a quick review and look at the gold charts and an analysis of where is it headed. A quick analysis here is to understand where is it trading and what can be the next potential major trend moves

One chart is worth many lines as always. Here is the chart posted below.

Gold Weekly Charts- Trend Analysis

Here we have analyzed the weekly chart of gold. XAUSD have been trading in between two major retracement levels for the past 11 weeks. This is in between the trading levels of 1450 on the upside and 1305 on the downside.  During the recent pull back a few weeks back it failed to clear the 1450 range on the upside basically keeping it restricted within the trading range.

Also that was a breakout from the downward channel (Highlighted in blue). Based on the above analysis two strategies emerge.

Pull backs: Trade a pullback within the trading range of 1350 on the downside and 1450 on the upside.

Breakout Trade: A break out trade can be initiated outside this trading range. Upside target emerges at 1550 and 1620 levels. Downside targets emerge at 1160 and 1100 zones.

The key part is here we are at a critical cusp of both a low risk pull back opportunity and a breakdown trade potential. Within the next few trading sessions.

What was Unique About the August series. What Lies ahead For the Markets Now

August series for 2013 was a unique month in lot of ways.  This will also go down as one of the trading outlier months for more reasons than not.

What happened in August that made it unique?

Point No 1: Well for starters markets showed tremendous amount of volatility with more those acceptable volumes. We witnessed major index futures moving to the tune of 5-8% on some of the days. This is something that we don’t hear often in advanced market. Do you remember when was the last time Dow jones or S&P moved to that extend

The interesting part was that we witnessed a gradual downside trend despite this move and more that acceptable volumes.

Point No 2: Most days in August saw a gap up or gap down of 2% plus on the major indices and yet on many days we didn’t see a follow up move on the side of the gap. This is something unusual for major indices. While our markets are known for this. The frequency was staggering.

Point 3: Our long time readers will recall that way back in Jan-Feb 2013 we had written that Weekly ATR was at its all-time lowest value and we should see volatility increasing over the next few months. This is what we exactly saw in the last few months. With Volatility peaking to a unusual high levels in August. This was in expected lines, but at the same time now the daily ATR stands at very high non sustainable limits.

Point 4:   In august thanks to increased volatility we saw India VIX peaking to its highest values since Mart 2011. VIX jumped significantly clearing indicating decreased risk appetite and confidence in the investor segments.

Now what lies ahead for September:

NIFTY FUT CHARTS-2ND SEPT -2013

Since the volatility indicators have deviated significantly chances are they will consolidate here. But even then since they are at such high values we expect a moderate consolidation to come through. This only co relates to the rate of market move and not the market levels.

Trading levels wise Critical swing hurdles lie near 5530 levels and clearing that we are all set to test 5605 levels on the upside. It will be important to see if we manage to close above those zones to indicate any signs of trend reversal on the charts.

While on the downside 5450 and below that 5300 will form a strong base for the series.  From a swing trading point of view it may be good to trade reversal within these zones both at upside and downside and look for a break out trade outside this trading zone.