14 Feb ’24 — Nifty flies like a kite today, Resistance of 21913 quite near — Nifty & BankNifty…
Nifty Analysis — Stance Neutral ➡️
Nifty does another impossible feat today, breaks yesterday’s swing low and then surges 341 points ~ 1.59% to close near the resistance level. Yesterday we were gearing up to go short today as every indicator pointed to a negative start with a bearish bias. The global macro was pretty bad as SPX closed at -1.37% as their CPI Inflation data came in hotter than expected. Market participants here were expecting Nifty to fall at least 200 points today, but look at what happened — we fell first trapping the bears, and then shot upwards creating an avalanche (but in the positive direction).
The price action made sense till 14.03 as it’s quite normal for the indices to retrace and close the gap. But a surge of 234 points ~ 69% of the day’s swing range within the closing hours made no logic at all. We still believe it could be news/event-related and if yes — we may get to know it by tomorrow.
In the 63mts chart, see the encircled region — the strength of the green candles stands out prominently. This has given Nifty a total makeover, till yesterday we were neutral with a moderate bearish bias. Today we are still neutral but with a bullish bias — as the resistance of 21913 is much closer than the support of 21491. The interesting thing is that if the moves today were not news-related and is a technical reversal then the break of 21913 will ensure the ATH is also getting taken out.
BankNifty Analysis — Stance Neutral ➡️
BankNifty does the impossible today, the reason we are saying this is because, despite a UP day yesterday, BN was unable to get past the resistance of 45399. See what happened today — we opened gap-down and by 10.55 we were back at the resistance level of 45399. The rejection made sense then as the mood was still bearish and little we did know what the remainder of the day had in store. The elongated encircled region is when BN was still negotiating in and around the SR level. Once it got past that — the next test was at the purple descending trend line (which we drew yesterday). That was also kind of accurate as on 3 instances we had a contact.
The climb of 670pts from 14.07 to 14.39 made all the difference today. It drove our algo into a tailspin and ensured that we booked the highest intraday loss till now. You might already know most algos prefer to play straddle or strangles and today being the expiry day created more trouble. The calls when sold were damn cheap and when the stop loss got hit — it appreciated more than 100 to 200%. Yesterday we pointed out the unusual skew in the PUT and CALL premiums, the calls staying cheap. Today we fell victim to that.
We have another W pattern today and since the resistance is breached, it is a good sign for the bulls. Overall our stance is now revised to neutral from bearish. What is more interesting is that BN has a perfect at-par close with the last expiry i.e. 7th Feb. The first thing we will be looking out for tomorrow is to see if there is follow-up buying or whether what we witnessed today was just a blip.
Algo Trading
Our BankNifty algo trades ended today with a loss of 11805.
· Intraday Algos run via AlgoTest on Kotak
· Webhooks automation run via TradingView on Dhan