NIFTY

NIFTY

As said in the previous post a close above 50 DMA will set up a retest of 5300 which has happened as nifty closed above 5150 last week and rallied up to 5300.

Now going forward we are heading into a strong resistance zone of 5322 and hence longs should be cautious and are likely to take profit off the table especially with expiry coming up in this week. Support for nifty is at 5200 and then at 5160.there is this slight –ve divergence developing on the charts which should be watched closely by traders having long positions.

On the options front the 5300 calls have max OI with open interest of 72 lac which suggests expiry to be below 5300 at the same time 5200 puts have max OI at 84 lac which indicates that expiry can be above 5200, so the expiry range can be between 5200-5300.

As for the medium term traders will have to watch how US markets develop the SnP500 has broken above its resistance level of 1110 and is now poised to touch its resistance zone of 1135-1145, but at the same time there is a –ve divergence on the charts there and hence we will have to be careful in case the rally fizzles out into a bull trap.

For the short term traders first sign of weakness will be below 5250 and a mild correction can happen if nifty slips below 5200.