January remained a dull show with move to both sides and expiring pbelow the point where it started.
#Budget2021 is on Monday. Activity in futures is at its lowest. It might be profit booking before next leg of rally to either side. Either way, smart money wants to book profit and sit at sidelines before budget. It can be seen from the cumulative OI on Nifty futures. Three times, we have seen such low activity in Futures and everytime we bounced back.
This is all long unwinding so cannot be termed as a market strength. But this long unwinding is also to be seen from "how the long unwinding is happening". Thats why we look at COI trend which is clear that unwinding is declining and smart money may already be out or is near its selling climax.
We are also taking support at 13700-13800 level which was previous resistance and also 50 EMA zone. RSI is also at a long term trend line support. On alligator, we are sideways and not bearish yet. So we can see some bounce from these levels. But
But that does not mean one should go Bullish as of now. I follow 30 and 75 minute time frames. In every time frame, we need price to close above 14000 supported by Data Analysis to go bullish as of now. So things are probably not so much bearish as it seems. For any bearish positions, one should carry a stoploss of 13865 on future levels.
Another aspect to look out for is #IndiaVix. Since September we are brushing 26 levels and falling from it. This time if we break this level, then market can become more volatile in the coming days. Equally possible that markets may rise post budget and Vix may fall. So a crucial level to watch for next 2 3 days.
Option wide data is negative right now. With OTM PCR at 0.5 and total PCR at 0.88, I am looking at Bearish to Sideways bias. On weekly options, 4 call strikes i.e. 14000, 13800, 14200 and 14300 witnessed heavy call writing. I consider 10 Lakh + as heavy writing. Put writing was there at 13800, 13600 and 13300 giving it a negative bias as OI was just 5 to 7 lakh. Point of analysis is 13800 strike. Nifty Futures closed at 13709 and spot at 13634, still 13800 has a lot of put writing or long buildup or straddles written. So I will not be surprised if we gapup and open above this level. I have already mentioned that with Volume Profile analysis 13700 - 13800 is acting as support. It is also the previous resistance turned support. Here is a chart of VAP and Weekly Option Chain.
On Monthly Options any significant writing is above 14000 strike price. Puts have been written at 13100 and 13000 strikes. 14000 strike has a lot of put writers which have not unwinded their positions. If the analysis is correct then we may see some sideways movement going forward in the range of 13800 - 14000. Here is monthly Option Chain.
So for coming week, I will be trading with Bullish-Sideways bias above 14000. Below 13700, I will trade with Sideways-Bearish Bias with SL at 13865. 13700 - 14000 should be considered highly sideways zone for some time now.
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