Nifty Open Interest Analysis

[Option.Trader]

Hi Bigbullinside
Nice analysis. You have used log scale in Y axis. Can we use linear scale for long term charts or log scale is preferred. I have this query because I checked the same monthly chart for 7 years with linear scale . It shows that Nifty has not yet touched trendline support (support at 5500).

Ideal is always log scale especially if you are tracking trend.. as it is more in line with % moves rather than a linear scale

Nice analysis BigBullInside with the charts though...

 

[Option.Trader]

Weekly nifty analysis

weekly close above the 5971 would be positive and break the downward channel

Daily with Fibo

Fibo gives a good indication of support and resistance. Drawn from the previous lowof 5663, we can see that it has reached 61.8% retracement upto 5941. Next if it takes out the previous resistance of 5971, it should go to 6015 and 6113

 

[a1b1trader]

That said, lets look at the daily charts...............
Here, Nifty gave a H&S breakdown a few days back.
Nifty made a low of 5663. Now if you look at the monthly charts, this was very close to the support line. Nifty reversed from there and right now is about 250 points higher.
Now we need to consider a few things that are happening right now-
1. Nifty touched the upper Bollinger band on 01-Jan-2013. After that we saw a move from 5950.85 to 6111.8 (160 points). If this upmove continues, we will again touch the upper band which is at 6007 right now and moving up. So with the previous move of 160, we can consider another 150 points from the point of contact. i.e. ~6007+150=~6150-6160. Which will be a new recent high, surpassing 6111.

2. H&S can now be classified as a partly false signal, as it only reached the first target. And right now Nifty is comfortably above the neckline. So, that is a bullish signal.

3. Global markets are not showing any signs of slowing down.

So all in all, if the current rally continues, we will see the same kind of momentum on the upside, as we have seen until now. I will post another little quirky signal that I stumbled upon with Bollinger band that supports this claim. And this will not stop until we have atleast touched 6350-6400. But this will happen (according to me), if and only if the Index manages to kiss the upper band.

Hi BBS

Very nice and elaborated analysis.

My view is

1. Though on the verge of negation, H&S pattern is not yet negated, as Nifty has yet to cross 5971, the second shoulder high.

2. There is a formation (in progress) of an IH&S (from mid Feb). Though left shoulder and head has already formed but not the second shoulder. So there could be a correction to form right shoulder. And if Nifty moves upwards after the correction then it can move much higher than 6100 levels (Because of IH&S)

3. If we look at daily chart in a longer time frame, from December 2012 onward, then there is a formation (in progress) of an H&S. And in this case also, left shoulder and head has already formed but not the right shoulder. And for the formation of right shoulder Nifty should remain below 6100 levels. And if there is a deep correction before 6100 levels then it may indicate the completion of this H&S pattern and we may find Nifty at much lower levels.

So until 6100, it may be difficult to decide the future movement of Nifty. Let us wait and watch what is there in future.

 

[bigbullinside]

All those who follow Market Psychology will get a big kick out of this one.
Consider the two scenarios :

1. When Nifty was in its previous upmove, everyone was giving targets of 6300 by March, 6500 by June. (Myself included)
An what happens. Market nosedives to its monthly trendline support at 5650.

2. This time around, if you hear what the "experts" are saying on television, you will get a completely different perspective on their part...........most of them are (around 90% of them) cautious to negative about this upmove.
Nifty will not go above 5850; it does.
Nifty will find resistance at 5940; it gives a weekly close above that level.
Now Nifty is supposed to find big resistance in the region of 6100-6120 (previous high). And this will be the final nail to this upmove.

Lets see what happens................................

 

[bigbullinside]

I say take a punt..........................
If the index manages to give a close above 5940 level today, buy some 6100-CE for April expiry. Because you can be rest assured that if the market manages to hold 5950, it will try to take out 6111.8

I have done it already. Am keeping a stop of 50% on this one. But that is just my way of doing things. Let it give another close above 5940 to get a confirmation. So I am walking the walk, and not just talking about it.

 

[jamit_05]

As of this morning, Nifty is flatish. But OI in 5900 CE has increased over 5 L and reached the 70 L mark.

 

[jamit_05]

Does it happen that NF touches the high end or the low end of the range before the range shifts? Cuz that would make a very good trade

This question is likely to be answered today.

The dynamics are interesting:

5900 PE has increased in OI by 8L since morning, and Nf is down.

The only scenario that makes sense is that these buyers of 5900 PE are "Get in get out" kind of Buyers who will book profit as soon as they get some. Pure speculators who want to go against the trend.

So, if 5900 CE sees liquidation of around 50% of todays OI increase, would mean the trend is now set to go back up again. The speculators do not see much down side anymore hence have booked profit.

This rise above 70L should not count, 5900 is still not the base.

 

[jamit_05]

5900 PE OI up by 13L and price down by 3.15 and now HOD break with no correction in OI but increase instead.

Writers are now in control and confident and eager to sell 5900 PE.

 

[augubhai]

Date: 8.3.2013

Cant get a more clear picture than today's data... 79% of 5700-5900CE OI got liquidated and 99% of 5800-6000PE OI got added.

The only caveat being on the futures side, no one , neither FII or Retail is taking long position home... ironically once you are out of all shorts in the system, its only fundamentals which have to push the market up...... technically as its a close above 5940, a retest of previous highs should be attempted... after a consolidation

Do you also look at the data at this link?
http://nseindia.com/products/content/equities/equities/oi_spurts.htm

On the "By Contracts" tab, it gives OI and price rise/slide.

 

[jamit_05]

@OT

Can we correctly say that since OI increased and 5900 PE is up, shorts were added. If so, then does 5900 Pe qualify as a base although it has OI > 70 L