Beginning last Monday with a high range bullish candle, Nifty continued its upward momentum. In such a scenario, my target for Nifty was 15650 but it even breached 15700. I can’t complain much as it is always tough to give a target when skies are clear. And well, Nifty did close the week at 15650 anyway.
Now, here’s what I am looking at:
I now have a hard bias for mean reversion as this is the kind of setup wherein I like to sell call options. It is entirely possible for Nifty to go above red trend line but that would be a fake breakout. My target for now is the green rectangle around 15450.
Thus, scenarios for the week ahead (highlighted as yellow box in chart)…
|Scenario||Probability||Anticipated Price Action|
|Consolidation||Med||Between 15600 and 15850|
|Downtrend||High||If breach below 15600; to drop till 15450|
|Uptrend||Low||If breach above 15850; to rise but not by much|
The daily ATR of Nifty has been declining steadily and may bottom out in a couple of weeks. Low ATR is a pain for option sellers as they make safe money but not much money. Things shall become interesting when ATR turns its head upward again.
DISCLAIMER: I am not a SEBI registered adviser. All the information provided on this website is for educational / informational purposes only and should not be taken as investment advice.