BankNifty Swing

Here is a chart of the BankNifty spot showing moves of the index in intervals of 30 minutes each from 20th of March to the close of trading on Friday 6th May.

BankNifty spot :

For purposes of clarity we have subdivided the chart into three zones according to the Steidlmayer distribution process. The three zones are the imbalance region A, which is the New IPM, the balancing of B region and the third region C which is the new imbalance move or the IPM as we call it here. Please note that the Steidlmayer processes 2 and 3 are actually included as one zone here as step 2 indicates start of balance whereas step 3 of the 4 step process is actually the end of the Balance process.

So we have a move in the BankNifty which on a larger Time frame has gone from imbalance to balance and back to imbalance. The question we need to ask is whether the imbalance has ended and whether we are in a new sideways move again or not?

For purpose of simplifying things further, I have given the value areas for each of the zones based on volume profile which tells us where the market developed 70 % of the Volume.

It is interesting to see from the chart that the down move had halted at the VAL of the Move A near 10662 levels and and the recent down move ( Move C) has matched the magnitude of move A with the highest volumes being distributed again in the 10880-10930 regions, which is the same as Move A

Coming to the current price, we can see overhead resistance now near 11315 spot, above which a 300 point move can be easily taken towards 11590/ 11635.

The zone of 11590-11653 if reached is a critical level and can push price lower to 11315 again or can result in a bigger drive back to 12000 if adequate buy volumes are present. Hence this level becomes like a stop and reverse for all traders across timeframes.

If the down move has to continue the bank nifty has to spend as little time as possible above 10880-10930 zone. Even in a case where the bank Nifty does that but fails to overcome 11315 then we can safely conclude that we are in a sideways market for the duration of the week.

Watch this index. It holds the key to how the Nifty would behave next week.

5900 spot

here is a daily bar chart establishing the downtrend from 63xx levels to 51xx levels.

A composite profile of daily prices is drawn across the chart.

There are two profiles, one for the entire down move from early November to the mid feb lows and the second pne from 5177 to current prices.

As can be seen prices closed near the point of control for the entire down move at 5900-05 spot.

The rally from 21st march is still running strong and there is no signs of any visible weakness on charts.

That is on the daily level.

However on an intra-day basis, for tomorrow, we have a conflict on our hands

1) resolution of the balance zone 5835-5880 has been to the upside, suggesting more upmoves. Incidentally the balance zone produced a 86 point upmove at today's closing prices based on NF.

2) we had a Double distribution day today which is also a sign of continuation.

3) The profile however also throws in a 3 I day, which is generally suggestive of capped up-moves at least till the last hour of the day.In a 3 I day, the highs are usually made within the first 60-90 minutes of trading.

Hence for tomorrow, if we do open and stay above 5959 in the first hour, I see a move to 5985 NF and 6012 NF, within the hour.Weakness will be on a break of 5932 towards 5905 and 5880.

For the upmove to continue, NF should not trade below 5880 tomorrow.

Tsharafna

That- from the part of the world I have been to recently means "It's nice to meet you".

Happy to be back on Vtrender and doing a post after 45 days +.

Lots has changed and it's very difficult to see the markets at 5500 levels instead of the 6xxx levels.I was in the trading room yesterday which has also changed and it was good to see some happy people and a room size which is up 30 % in one month.

More importantly, there are some smart people with sound opinions and it always is beneficial to trade in an environment conducive to personal growth and the like.

When I was struggling with my trading back in 2003, it was community support from the likes of Shai and one or two others which helped me get going.The power of trading with people can never be underestimated as long as everybody has got one consistent objective to remain profitable.NewBie traders wanting to learn the markets will never be disappointed with Vtrender Live in it's present form.

I know Shai has been putting a lot of efforts behind the scenes not just in putting out some immaculate trades, but also some great educative articles at Vtrender-2, which should make aspiring profilers learn auction market theory quickly.



My inputs at Vtrender have been restricted off late owing to some additional demands on my time, but I have agreed to work on the "positional aspect" of the trading room with analysis and trades to meet our swing trading requirements.These include the long term OrderFlow charts which should help us keep positions for more than a few days.

About the markets today, we had a neutral day. It's a pattern with neutral days and they can be repetitive or follow each other closely.But today was also a balanced profile and if you have been reading this blog long enough you would understand the importance of those two words.They are game changers in more ways than one. I hold the view that we have broken out of the downtrend and should challenge 5577/ 5625 next.The swing traders would hold 5370/ 5410 as their stops.



I would post details about these charts in my next post.

Nifty Breaks it's 2 week balance

In my Last post I had mentioned that the noise around the settlement day was not clinching evidence to signal a change of trend but to quote from that post again " Sometimes what didn't happen has more implications than what actually occurred."

The open was crucial as a follow up to that afternoon's move and the open left nothing in doubt.



The sellers managed to take the Nifty future down 150 points in a session before some exhaustion in the Bank Nifty and some opportunistic buying as well as short covering in the Nifty future managed to take the Nifty up about 70 points from the lows.

The area around 5625 was a high volume zone noted at the close of trading on the 27th. In hindsight it represents the area where new sellers have entered the market and are ready to pin the market lower.

People who follow parameter based indicators would recognize this zone as the 200 DMA.But believers in market generated information should not hold any level as sacrosanct or too big for the market to scale.

Strength above 5625 will put 5685/ 5725/ 5785 in play. Each of these levels will be used by sellers to re-enter short positions in the market.

Looking down we have Friday' s 5481 and then 5435 and 5373 as the next major supports for the market.Break of one should lead to the other.

For those of you who were wondering what happened to the OrderFlow chart of the Bank Nifty after my intra-day post, here it is :



The profile picture posted yesterday put in a poor low at 10530, in itself a reason to revisit that level again. We'll see if it breaks the second time it gets there.

To close, I drew up a chart to represent the times, the Bank Nifty has been out-performing the larger nifty.

Have a Look :



It's a 40 day chart where Blue represents the BankNifty future and the Green the Nifty future. It's only from the 24th that the BN has been out performing the Nifty.The banks are important to our investment portfolio and we'll continue to keep an eye out for this relative strength.

The ratio of the two is turning into a contrary indicator with an upswing marking a decline in the indices and vice versa.

Some thing to chew about over the weekend.

Have a good one everyone. !

Bank Nifty

If you have been following the blog for sometime you would know of us as passionate Bank Nifty traders.

Most of the time you will see on this blog a Nifty chart along side the Bank nifty.

Our reasoning is very simple- We Consider the bank Nifty as the leader of the two instruments, a fact which has helped us and kept us ahead of some major moves of the market.

So as the market revists the 5750 zone, it pays to keep an eye on what the bank Nifty is doing currently .

Here is the profile chart of the past five days :



As you can clearly see we have operated this entire week well within the 10960- 10380 range set on the 14th of Jan.

Today the bank Nifty stayed above the 10488 point of control of the balanced profile on the 17th of this month( brown dashed line). Infact it was the low of the day today.

Relatively speaking it was much stronger than the Nifty future which broke below it's level of 5661 in early action today.
The high of the day today was actually the point of control of the profile dated 14th of November ( brown dashed line from 14th ).

Much of what can happen tomorrow will depend on how well the Bank Nifty can negotiate with the seller at 10920-10940.Success here will easily bring 11040 and 11185/ 11270.
If the Bank Nifty does manage to do that, then we will be witness to the nifty future flying over the 5750 level.

Supports will be at 10824/ 10736.

Sideways

If you have been following profile charts, for the past few weeks you may have noticed that value has been going sideways for a few weeks now.

To illustrate the activity of the Nifty further, I picked up some bar charts and did some good old fashioned trendline analysis.

Have a look :



The chart is a 30 minute bar chart of the Nifty future for the past 30 days.

6097 and 5730 represent the extreme ends of the bracket we currently find ourselves in. Within this channel I have introduced two light blue horizontal lines ( on the right ) which define the path from the lows to a possible top of the bracket, the Nifty future took through the current week.

Also included are two heat maps based on volume profile.The larger heat map on the left is for the entire duration of the current bracket ( 6097-5730) and the one on the right is for the last 5 days of activity.

The black in the heat maps represent zones of low volume activity with the color gradient going to blue, green, yellow and red as the volume increases.This option helps us to get a visual display of high and low volume areas.

As you can see the extreme ends of the bracket ( black zone) have been quickly rejected and price hasn't spent a lot of time there, whereas the middle ( red/ yellow) is where the market has auctioned most of the time neat the 5950 zone.

So whilst we are within the blue channel, we are looking for signs to see if there may emerge a breakout based on the last five days of activity.

Unfortunately we can see a replica of the past 30 days in the last 5 days of data.

The red and yellow in the past week are exactly where they were in the past one month.

So the inference is that the sideways range in the Nifty would continue.

This market is an option writer's delight.