@Mayavi, I guess thats a wonderful question which I would love to answer, since you are following my thread for long you must be knowing that I have created my own model to trade. So the square off levels are automatic however, I can tell you the reason.
I have large data set for last 12 years and its been observed that 92% of time market breaches the support and resistance levels. But, today was that 8% of time if you see that market exactly turned at 5610 what was my immediate support levels. So in my model one of my variables is the levels of S2 & R2 not S1 & R1.
I hope that clarifies your question.
Nifty clocked intraday volatility of 0.8%, which is lower than the long term average. Immediate support level lies at 5606 and resistance level lies at 5650 respectively. FII's bought INR 2076.04 and sold INR 1855.59 crores, whereas DII's bought INR 991.95 and sold INR 1072.18 crores in the cash market respectively. Indian rupee weakened by INR 0.09 vis-a-vis USD.
Call for Jul 07, 2011
Initiating a Short Trade with SL 5655
Optimal Short Level from 5645 till 5623 & Optimal Square Off Level 5595
niftyquant blogspot