Nifty future last week bounced from very good support level, but this bounce was a technical bounce and fundamentals had not changed at all. I am still of the view that nifty will be add some selling pressure around 4960 levels as level being strong resistance here. In the below chart the retracement of November 2010 high to low of December 2012, 23.6% level falls at 4967. Also retracement from low of December 2012 to high of February 2012, here 61.8% Fibonacci level is at 4977. Because to this nifty future is going to face strong resistance 4960 zone and hence short positions can be added around that zone for 2 – 3 days target as 4860 level. Placing stop loss above 5010 level. Traders can also buy nifty 5000 strike price put option as it will be “in the money options“. We can see some spike in the premium once nifty face resistance at 4960. Target will be at-least 75% of the premium paid when nifty future trades at 4960 zone. Trader can use stop loss as 5010 level of nifty future. For nifty future traders this is high probability trade setup and excellent in risk-reward-ratio, short selling opportunity. Thing of caution is nifty future has not entered the overbought zone on daily or weekly chart, however bias is slightly bearish. Check daily chart of nifty future below.
Open interest change in nifty future last week shows that short covering was present not fresh buying. So unless there is fresh buying nifty future is expected to be moving lower after resistance zone is tested. look at the below image of change in open interest.
Also Nifty option open interest tells 5000 call option has highest open interest amongst all call option, so it will act as resistance for now and every up-move will lead to adding of fresh short positions.
Also next week on 31 May, GDP data will be revealed by the finance minister and I am not expecting it to be higher hence lower GDP may further trigger selling in market on the day of F&O expiry of May series. If you wish to learn to trade like I do, then join me with Technical Analysis Course or call me on +91-9970777789.
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