After relentless selling in market from last week of February to third week of March, Markets have witnessed Short covering by Traders and some level of bottom buying by FIIs as well in the last three weeks. NIFTY recovered more than 20% from recent swing bottom of 7500 level. NIFTY is now technically in minor UPTREND for short term because of the below data points:
- NIFTY made higher high on Daily charts and closed above 9039 level, which was previous swing high. However no major spurt in volume. Therefore, the view is minor Up Trend.
- NIFTY closed above 20 days EMA.
- PUT CALL RATIO (PCR) for 23rd April NIFTY options is 1.13 that shows more PUT options sold than CALL options.
- PUT CALL RATIO (PCR) for April monthly series, i.e. 30th April NIFTY options is 1.25 that shows more PUT options sold than CALL options April monthly series as well.
- Maxpain moved from 9000 to 9250 levels.
- Open Interest (OI) for 23rd April: 9000 PUT strike has highest OI followed by 8000 and 8500 strikes. 10000 CALL strike have high OI followed by 9500.
- OI for April monthly series is high at 10000 strike for CALL options followed by 9500. For PUT options 8000 strike has highest OI followed by 9000 and 9500 strikes.
- NIFTY is taking support at upward Trendline.
Taking all the above points into consideration NIFTY is likely to close between 8500 and 10000 by 23rd April expiry, so selling OPTIONS outside this range seems to be relatively safe. For April month expiry, NIFTY is likely to close between 8000 to 10000, so selling CALL options 10000 and PUT options below 8000 is safe for 30th April expiry.
NIFTY should break above 9350 to continue its Uptrend upto 9500 and 10000 levels. Close below 8800 will change short term direction to Down Trend. As always, Market is supreme so trade with hedge and you have manage your positions as i have taught in case of any major changes in the direction of the market. Adjustment or Management of your positions is key for consistent profits.
