22 Aug ’23 Post Mortem on Nifty & BankNifty + FinNifty Weekly Expiry Analysis
Nifty Analysis
Yesterday we had a neutral stance for Nifty and a bearish stance for BankNifty. If you were watching every 5mts candle today, you wouldn’t believe how we ended up getting Nifty at +0.01% and BankNifty down 8.75pts.
Nifty makes a beautiful rounded top formation today, will wait for tomorrow to see if we get the cup & handle formation. As soon as the day started it was pretty clear that we will not have any major movements today. The reason being absolutely low options premium on FinNifty which had expiries today.
Usually Finnifty (which is quite liquid these days) shows some excitement in options premium if a directional trend exists. And since it sucks out the liquidity from banknifty and nifty — we see jumps in their premiums as well (OTM). Since those jumps were not there today, we assumed it was going to be a flat day.
Well the data did not disappoint — we did have a flat day, but the price action was nothing as expected. Never ever thought we will get a rounded top formation.
If we look at the 1hr TF — we are still inside the falling wedge pattern. I just drew one more descending channel (orange color), the rationale being a few gaps in the prior session. See the blue circled regions, nifty failed to reach till the original trend line (blue color) in those instances. Do not worry, we will decide which one to keep by this Friday.
I am continuing my neutral stance for Nifty50 for tomorrow. If we fall below 19260 tomorrow, I will go bearish. If we take out the 19460 levels — I will go bullish.
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BankNifty Analysis
The reason why we were bearish in the first place was the inability of BankNifty to take out the resistance of 44068. Today’s price action is the biggest proof on why it worked. If you notice the trades today, it was above or near this level till 13.40. Then banknifty started falling. And the final close came at 43950 — there was a noticeable fall of 160pts from 13.30 to close.
On the 1hr chart, the trades below the horizontal blue line ~ 44068 is quite visible. If banknifty stays here for a considerable amount of time — then its a good sign for the bears. The momentum for further falls will pick up pretty fast.
Also note that the falling wedge will converge tomorrow, so a strong up move is more dangerous. The bulls will use that opportunity to drive the prices up and it could even take out the 44800 levels in one go.
I am not quite sure which of these scenarios will work for tomorrow. I am inclined to go with the bearish stance as its still under the resistance of 44068.
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FinNifty Expiry Analysis
Between the last expiry and today, FinNifty has only given up 110pts ~ 0.56%. This is not at all a bad number if you consider the bearish trend it is in. Just like banknifty, finnifty is also following a falling wedge pattern with the same descending trendline slope. The noticeable point is that the support is at 19424 and technically Finnifty is still in the wedge whereas BankNifty has fallen below the support.
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- PS: The trades taken are no recommendation, blindly following them may cause more harm than good. Read them with an educational intend only as I am not SEBI registered- full disclaimer here
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