Analysis and Trade Plan - 29 January 2020

  • I mentioned in my profile that Nifty is bullish above 12200 and below that view will negate. I was not sure of the trend on Bank Nifty either so rather than going long or short, I went short and wrote strangle on 32100 CE and 31500 PE.

  • Monday, we got the bearish signal and went short on Nifty. Through the following tweet, clearly mentioned that below previous day low, we will fall.

  • Analyzing today, we are in danger zone. Everyday we can either do as the data and technical analysis is showing or we can throw that out the window and opposite happens like many time in the past.

  • Open Interest has been rising with the fall. Bearish sign.

  • It looks bearish till the time 12130 on Nifty future holds.

  • Price is falling and RSI is falling along with it. MACD on daily charts is also going strongly bearish. Only problem is that we are testing the lower trend channel which happens to be bollinger band bottom too from where support can come. Plus alligator is sideways right now which means counter move can also come.

  • 11980 is where the support came last time. We are on the way right now. It needs to be seen whether it will be tested or we will bounce before hand.

  • Data wise, 12100 calls added 22 lakh OI today while 12000 OI shed 5 lakh OI. Its just 2 days to expiry, so 12000 writers should not have left the position if they were going to defend it. It gives a hint that before expiry 12000 may be tested once.

  • Max Pain has come down to 12100 today.

Overall the trend is bearish and should remain so. But I am keeping a close watch on 12130 levels. If broken and sustained above it, I will start looking for buying signals.

  • On Bank Nifty bears are in control below 30980. Alligator has gone bearish. Price is standing on last support. Below 30650, it can slide very fast. Today this level was defended. Till the time 30960-30980 holds, we should do fine. I have written 31300 CE, 31600 CE credit spread. Also have a strangle on 30100 PE and 31500 CE.

  • MACD has gone further bearish with Bollinger Band opening to downside now. Thats why mentioned that below 30650, price will slide very fast.

  • Data Wise, calls were added on 30700, 30800, 31000 CE strikes which gives a bearish bias.

  • Max Pain also moved down to 30900 with next month max pain also moving down which is bearish signal.

Data and Technical Analysis is bearish for Bank Nifty too. I would be cautious around 30960-30980 levels. If need to turn my position then will do so. Below that, I am bearish.

Rohit Katwal

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