Another boring day on dalal street.. Tight narrow range.. of 37 points today (17-Nov) which is 0.7% of closing price. If you take a bit of approximation and consider the high 5079/5074 as same then yes
we had IDNR7 today.
Previous such tight range days were on 26-Aug - 38.7 point range, which was 0.8% of Nifty spot value of 4680.
Earlier then that we had 9-Sept - 41 points range which was 0.9 % of Nifty spot value of 4817.
So from Range in points - we had NR45 today.. but as per range in % - we had NR-350+ today.. (I have approx 350 days of data in my daily tracker)
Lets zoom out and see weekly picture. Weekly range so far has been of just 85 points against the average of 210+ points. That's is whopping contraction of >50%.
Again this is also the smallest % weekly range that I have seen.
What is important is not the number after NR , but what happened after those NRxx days..
1) After 26-Aug = Nifty formed double top at 4750 level in next 2 days, retraced down for next 4 days. Saw reversal on 5th day with bullish engulfing and then breakout of double top taking
it to the high of 5181. This breakout got stuck in another indecision period of 5 days around 9th september
2) After 9-Sept - Nifty stayed in the range for next 4 days. with one false breakout.. and then breakout of 4800 level to the high of 5181..
My interpretation - mkt has been in indecisive phase for extended period of 4 days (WOW, what a brainy interpretation ?).. Certainly not something that we want to see near prev top. Bulls would call it, mkt taking breath before breakout.. and bears might be getting happy as this indecision near /below the resistance is their dream zone to go for a kill.. I have my own reservations on upside left from here on.. but favour the odds and opportunities that is on the downside. We are seeing divergence in daily RSI / MACD as well which doesn't favour bulls.
There could be false breakouts from it. Next week is F&O expiry week as well hence people will try to protect their position, which will add to the volatility in a narrow range. If new trend develops, then there will be major reshuffling in Option OIs.
This week is options expiry week in US mkt so we might not see major change in direction till global indices till next week. One of the reason that we had seen the fall of last month starting post US option settlement. There are conflicting signs coming out from Central banks as well where on one hand they say that low interest rate regime is going to continue.. and on the other hand they are keeping watch on inflation. Inflation has started going north as per number in UK given yesterday. US CPI numbers are due today (And it has gone up i.e. prices have gone up in US which indicates inflation is building up). Christmas season will throw the real picture of economy from Common mans perspective so it is in indecisive phase. Until numbers depending on common people are not getting greener, it is difficult for global bull market to sustain.
I will be looking for signs of false breakout or strength in breakout to trade the next directional move with Dec contracts.
For now I am pulling out from my Nov position, and focus on Dec (cause next week, I am holidaying). My strangle trades got stuck in this congestion. Lost about 10 rs on each leg due to time decay.
Still not hit my stoploss today (SL at when combined premium of the position goes below 75 Rs), but if it doesn't move tomorrow, then I will be closing it out even if stop is not hit and taking the loss on it.
Hope this helps..
we had IDNR7 today.
Previous such tight range days were on 26-Aug - 38.7 point range, which was 0.8% of Nifty spot value of 4680.
Earlier then that we had 9-Sept - 41 points range which was 0.9 % of Nifty spot value of 4817.
So from Range in points - we had NR45 today.. but as per range in % - we had NR-350+ today.. (I have approx 350 days of data in my daily tracker)
Lets zoom out and see weekly picture. Weekly range so far has been of just 85 points against the average of 210+ points. That's is whopping contraction of >50%.
Again this is also the smallest % weekly range that I have seen.
What is important is not the number after NR , but what happened after those NRxx days..
1) After 26-Aug = Nifty formed double top at 4750 level in next 2 days, retraced down for next 4 days. Saw reversal on 5th day with bullish engulfing and then breakout of double top taking
it to the high of 5181. This breakout got stuck in another indecision period of 5 days around 9th september
2) After 9-Sept - Nifty stayed in the range for next 4 days. with one false breakout.. and then breakout of 4800 level to the high of 5181..
My interpretation - mkt has been in indecisive phase for extended period of 4 days (WOW, what a brainy interpretation ?).. Certainly not something that we want to see near prev top. Bulls would call it, mkt taking breath before breakout.. and bears might be getting happy as this indecision near /below the resistance is their dream zone to go for a kill.. I have my own reservations on upside left from here on.. but favour the odds and opportunities that is on the downside. We are seeing divergence in daily RSI / MACD as well which doesn't favour bulls.
There could be false breakouts from it. Next week is F&O expiry week as well hence people will try to protect their position, which will add to the volatility in a narrow range. If new trend develops, then there will be major reshuffling in Option OIs.
This week is options expiry week in US mkt so we might not see major change in direction till global indices till next week. One of the reason that we had seen the fall of last month starting post US option settlement. There are conflicting signs coming out from Central banks as well where on one hand they say that low interest rate regime is going to continue.. and on the other hand they are keeping watch on inflation. Inflation has started going north as per number in UK given yesterday. US CPI numbers are due today (And it has gone up i.e. prices have gone up in US which indicates inflation is building up). Christmas season will throw the real picture of economy from Common mans perspective so it is in indecisive phase. Until numbers depending on common people are not getting greener, it is difficult for global bull market to sustain.
I will be looking for signs of false breakout or strength in breakout to trade the next directional move with Dec contracts.
For now I am pulling out from my Nov position, and focus on Dec (cause next week, I am holidaying). My strangle trades got stuck in this congestion. Lost about 10 rs on each leg due to time decay.
Still not hit my stoploss today (SL at when combined premium of the position goes below 75 Rs), but if it doesn't move tomorrow, then I will be closing it out even if stop is not hit and taking the loss on it.
Hope this helps..
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