Analysis and Trade Plan - 11 May 2020

  • On 5 May 2020, we fell by 500 points and closed at 9285 on Nifty Futures. On Bank Nifty, we stood at 19600. After 5 days, Nifty is at 9236 and Bank Nifty is at 19300 levels. From simple price action perspective, it is resistance to downward momentum.

  • Volume is less and smart money involvement is least at this point visible from COI.

  • So far, price has been forming Higher High, Higher Low pattern which is a sign of uptrend. For Bank Nifty, it is more of a sideways movement which can resume down trend below 18800-18500. Broadly both will go the same way.

  • Nifty has remained strong throughout this rally while Bank Nifty remained week. Sellers point of control for this bear run was at 9138 and Nifty has been trading above that. Point of control on Bank Nifty was at 21000 and price has been trading below that. We are looking at a sideways movement with a decisive break in either direction.

  • Price is also below 20/50 EMA.

  • On Fibonacci, we may have given a dead cat bounce till 38% retracement levels. MACD is starting to turn negative and even RSI is showing weakness.

  • Technically, Nifty and Bank Nifty are getting weak and awaiting trigger in either direction.

  • Max Pain has been holding at 9200 and 19500 levels. If broken, we can start the downward slide.

  • PCR for Nifty (0.80) and Bank Nifty (0.72) is turning bearish.

  • OTM PCR is at 0.75 and turning bearish for Nifty.

  • Call writing is double the put writing. 45 lakh fresh calls were written against 23 lakh puts for Nifty.

  • 9200 PE and 9400 CE can be a crucial make or break point. I will be keeping an eye on 9200 PE closely on Monday. Even monthly options are turning bearish. I am planning to exit my short call butterfly cost to cost now.

  • Trend will turn bearish below 9000.

  • On Bank Nifty also we have more calls written than puts.

Conclusion: With first trigger to downside below 9200/9000 & 19000, I will turn bearish.

Happy Trading

Rohit Katwal

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