30th Oct ’23 — Nifty Shows Strength, but bullish only above 19310 — PostMortem on Nifty & BankNifty
Nifty Analysis
We opened inline and then started falling rapidly. We hit the intraday low of 18940 at 09.40 and things were looking quite bleak then. I was gearing up for going short, but we had a sharp reversal from there. The recovery was exactly 1% ~ 189.7pts to hit a new swing high of 19129 by 12.00.
Nifty50 did not stop there, it attempted leg2 till 13.35 and then leg3 till close. Somehow the price action of yesterday and today combined shows early signs that the bears are getting outnumbered.
Even though we added 93pts today, I have still not changed my stance to bullish. 19226 is my first level to watch out which coincides with the 38.2% retracement level of the recent fall. Then the most important zone of 19310. Ideally, I wish to go long only if the 19310 resistance is taken out.
The options data also shows bullishness, but bear with me for a while here. I do not wish to jump the gun early and go long. I prefer to do that only if the bulls are that strong. In case the bears would like to make a comeback this week — 18880 level has to be broken quickly. The longer it stays above this zone, its going to be tata bye bye bears.
BankNifty Analysis
Since BankNifty is in the neighborhood of support and resistance, it is quite easy to explain with examples. The open was almost inline but we started dropping fast. We gave up 438pts ~ 1.02% by 09.40. Unlike Nifty50, I did not find it that encouraging to look out for bearish opportunities. The main reason is the decay of premiums. None of the OTM strikes had excess juice for the squeeze — so I just chose not to participate.
At 09.20 we had the first breach of 42576 support, the strong red candle was ample proof of strength. On its way back 3 strong green candles negated the 42576 resistance. Then between 13.00 to 13.20 we had a smooth rejection of resistance2 at 43012. My mistake was to assume that we would close below 43012, this was proven wrong between 15.00 to 15.20 when this level was taken out.
On the 1hr TF the next level to watch out on the upside is 43253 followed by 43404. If we were to fall 42576 has to be taken out pretty quickly and the next support comes only at 41624 — so the bears need to have strong momentum. I wish to maintain my neutral stance till 43404 is not taken out.