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    Day trading guide for Monday's market

    Synopsis

    Overall price and data setup suggests bounce may be seen but multiple hurdle and supply pressure at higher zones could restrict its upside momentum with higher volatility.

    ThinkStock Photos
    Chandan Taparia, Motilal Oswal

    Nifty Outlook
    Nifty opened positive on Friday but remained consolidative and moved within a range of 50-60 points throughout the day. It surpassed the previous day’s high and was holding well above the last closing zone, but a follow-up buying was missing at higher levels. It formed a bearish candle on the daily chart, while a small bullish Inside Bar or a Harami candle on weekly scale indicated a tug of war near to the key hurdle of 12,000. Overall, the price and data setup suggests a bounce may be seen but multiple hurdles and a supply pressure at higher zones could restrict its upside momentum with higher volatility. To witness an up move towards 12,100, Nifty has to hold above 11,820. On the downside, key support exists at 11,777-11,750 zones.
    picksET CONTRIBUTORS
    Derivatives
    India VIX was up by 0.88 per cent from 21.64 to 21.82 levels on a week-on-week basis. It negated its higher highs formation but has to further cool down below 20 for market stability. Nifty futures closed the week with a gain of 1.44 per cent. Addiction in futures Open Interest by 7.31 per cent on a weekly basis indicates that longs are being added. During the week, Put Call Ratio based on Open Interest of Nifty moved in between 1.35 to 1.61 levels and closed the week at 1.47. On the options front, Maximum Put OI is at 10,500 followed by 11,500 strike, while maximum Call OI is at 12,500 followed by 12,000 strike. We have seen Call writing at 12,500 followed by 12000 strike, while Put writing is seen at 11,800 followed by 11,900. Options data suggests that an immediate trading range lies in between 11,700 to 12,100 zones.

    Bank Nifty opened positive but failed to hold above 24,750 and remained consolidative for most part of the day. It settled the day flattish but continues its higher highs - higher lows formation on a weekly scale. It formed a small Bearish candle on the daily scale as it closed lower than opening but continued its higher low formation for the sixth consecutive session. Now it has to hold above 24,250 zone to witness an up move towards 24,750-25,000 zones while on the downside support exists at 24000-23750 levels.

    NIFTY : Option Strategy:
    Bull Call Spread: +11900 CE - 12050 CE: (29th October, Monthly expiry)

    Buy 1 lot of 11,900 call@ 120
    Sell 1 lot of 12,050 call@ 50
    Net Premium Paid: 70 points

    Keep SL of net premium of 35 points: Risk of 35 points
    Keep target of net premium target of 140 points: Reward of 70 points

    Rationale:
    Nifty has been witnessing buying interest on declines and supports are intact

    PCR OI is increasing with buying in selective sectors

    Volatility is overall at lower zones, suggesting market stability

    Thus, suggesting Bull Call Spread to get the benefit of positive to range bound move in the market

    Forex Technical
    Kishore Narne, MOFSL
    USD/INR Status: The pair is likely to trade in a higher range in the short-term
    CMP: 73.65
    Target: 74.20
    Stop Loss: 72.70

    Trade: The pair is likely to trade in a higher range in the short-term. Support is placed at 72.70, whereas resistance is at 74.20. An initial dip towards 73.30 will be a good buying opportunity.
    picks1ET CONTRIBUTORS
    EUR/USD Status: The pair is likely to continue its northwards journey in the short-term
    CMP: 1.1859
    Target: 1.1990
    Stop Loss: 1.1725
    picks 2ET CONTRIBUTORS
    Trade: The pair is likely to trade with positive bias in the coming session and is likely to target 1.1990. An initial dip towards 1.1800 will be a good buying opportunity with a target of 1.1990.

    Commodity Calls:
    Amit Sajeja, MOFSL
    Picks3ET CONTRIBUTORS

    (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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