Nifty future slide highest in last seven months. A big bearish engulfing pattern has formed on nifty EOD chart. Earlier I thought that nifty will formed five wave pattern on hourly chart but it went invalid as it broke 5925 in morning session, which I have posted in my last post that keep stop loss at this level and be on long side. It seems that it formed A,B,C pattern, and if this count is ok then Nifty should reverse from 5820 level and C wave should take nifty once again towards 6000 level. I highly expect that last four days till expiry is going to blast if nifty hold 5800 level. Remember I am saying if hold 5800 level.
Fiis sold 16440 contracts of index future worth Rs. 486 cores and open interest decreased by 7418 contracts indicating that Fiis are not aggressive for short side. They have bought huge 1213 cores in cash market segment, giving indication that they have use the dip for buying. Why they are buying in dip when everybody is bearish in current market situation. This all compel me to think that up move is possible in near term. Lets consider Option open interest data.
Nifty 5800 put added 10,89,100 contracts in open interest and this strick has highest open interest on put side suggesting that 5800 level may give base to nifty. Open interest has added in falling market condition. Nifty 5900 call added 21,20,500 contracts in open interest. Option data suggesting that 5800 may give pause to bears and nifty may try to recover in c internal wave. Put Call ratio is at 0.88 also suggesting for reversal in market.
As per RSI on EOD chart is in oversold area indicating investor should cautious on short side and tomorrow may form bottom on Nifty. Mettle sector is in highly oversold zone may give nifty boost up.
Strategy for 22 Feb:- If nifty come near 5820-26 book profit in short and go reverse with the trade with strict stoploss at 5794 level.
GOOD LUCK