We have now had 7 days of consecutive declines... this tells us about the nature of this correction. We never had 7 days of continuous rally though!
Last 2-3 days, option writers have switched to writing calls. Highest open interest is now at 6300 call. This means writers do not expect level to be crossed this expiry.
Also markets have now broken 2 swing lows without any pullback. Now chances are high that any rally which happens will get sold into so market will now be a sell on rise. Formation of a lower swing high is therefore very much possible.
For resumption of rally, we need formation of a lower swing high followed by a breakout above this. As of now, this will take quite some time.
Intraday charts show buying coming at lower levels... support is around 6000F while resistance is at 6050-6085F.
This is how the 30 min chart of the correction looks like... I will be bullish above 6085F. If you are short, this will be the SL.
Last 2-3 days, option writers have switched to writing calls. Highest open interest is now at 6300 call. This means writers do not expect level to be crossed this expiry.
Also markets have now broken 2 swing lows without any pullback. Now chances are high that any rally which happens will get sold into so market will now be a sell on rise. Formation of a lower swing high is therefore very much possible.
For resumption of rally, we need formation of a lower swing high followed by a breakout above this. As of now, this will take quite some time.
Intraday charts show buying coming at lower levels... support is around 6000F while resistance is at 6050-6085F.
This is how the 30 min chart of the correction looks like... I will be bullish above 6085F. If you are short, this will be the SL.
Dear KPL Sir,
ReplyDeleteMany thanks for your analysis.
Regards.
Dear KPL,
ReplyDeleteWould like to read the article Option pricing and implied volatality..the article is not showing up on clicking.Could you help ?
I think I deleted this by mistake.... don't even have a backup of this.
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