We believe that Options traded on the NSE are institution driven and a change in the Open Interest (or a lack of) can have pointers to the general market direction.
Let's marry the Open Interest analysis to what Market profile is saying.
Let's look at the Nifty weekly chart.
It's been a side ways to an upmove market in the Nifty for the past few weeks.
The market has shown an inclination to rotate around the 5485 region, which is also the zone where the highest volume has been traded.
The past two days have each had a range of 30 points from high to lows.
Profile tells us that this activity indicates a 'balancing act' as also the fact that this level has been accepted as good value by both buyers and sellers in the market.
The largest volumes always trade at good trade facilitation points which in our case is the 5485 region.
Going forward this region will serve as a big reference point in the coming months.
The 'balancing act' would be a 'doji' in candlestick analysis, but the profiler would know that it serves as a continuation of the move which has come.
But one look at the open interest will tell you that the upmove will be a labored one from here.
The better index for a strong upmove is the Bank Nifty.
Have a look at this beautiful uptrend.
The shaded regions are the value areas and you can see through consecutive weeks how value has been established upwards.
The only change was in the week beginning 23rd August which incidentally formed a 'p' shape indicating long liquidation.
There is a small seller at 11000 in this index, but the way in which 10925 ( a previous daily VAL) was defended on the daily charts ( incidentally also a double bottom on hourly) it points to new momentum above 11039.
You do know that figure don't you?.
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10 comments:
Gm Shai,
Can u provide value areas for few scripts
1.Ongc
2.Axis bank
3.Hdil
4.Dlf
It will helpful if u provide me value areas for the above scripts.
Thx
sir,which charting service provides market profile charts?
Mcdowell, Ranbaxy, Tata Chemical.....many of these futures had super rallies last week (in fact, Ranbaxy and TC are in the last leg of their UP rally so we can catch a down side at some point??).....Shai, Girish - can't we catch one such rally every week on BUY/SHORT side?
Can you give the AFL for the above charts.
shai/viren
happy "teachers 12 years" day..cheers:)
Musti,
ONGC - Weekly 1336-1326-1316 & Friday 1325-1323-1321
AXISBANK - Weekly 1395-1379-1336 & Friday 1385-1380-1376
HDIL - Weekly 268-262-256 & Friday 269-268-266
DLF - Weekly 314-310-304 & Friday 314-313-312
Musti,
Girish has provided the value areas, but know your TF as well as buyer/ seller activity when you use value areas for stocks.
Sam,
The afl is in the Classroom to your right.
Prem,
There are many services which provide MP, but the most opulat is Market Delta.
You can also use Amibroket with a proper afl.
Janak,
Our approach has been to deliver on stocks which can provide consistent results.
Most of them may not produce the results you mention, but rest assured that they will work on a consistent basis over the long term.
It's the story of the tortoise v/s the hare.
We will strive to get the bigger ones you mention, but the attitude should be that when we do get one, it is a bonus over and above our regular ones.
Manu,
Cheers!
( What's the 12 for?)
viren,
wise words - i agree fully.
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