Bulls strengthening, holding onto lower levels
An inside day forms after an outside day indicating an expansion in volatility was led by some contraction.
An inside day forms after an outside day indicating an expansion in volatility was led by some contraction. Inside day is a Two bar pattern that indicates the trading range was within the previous day range.
Interestingly, this inside day was well within the upper 50 per cent range of the previous day; the bulls were holding on the entire day.
A gap up, Open relative to previous close coupled with expiry day being a range bound session was a treat for writers eating theta. We believe the bulls showing strength and holding onto the lower levels along with some rebound in global markets led to an overall muted day with bulls gaining some control.
A muted day is rather good when we are witnessing headlines such as US Government could default amid increasing inflation, rising energy prices. On the domestic front, we are also looking forward to the central bank's action.
At times, to not have a view is also a view in trading/investing and that's what we may be in for now. On the higher side 17,850 – 17,820 needs to be taken out on a closing basis with some strong momentum and downside supports are at 17,620 and 17,460. Momentum traders would utilise the dips in any favorable opportunity that can arise from global sentiment and domestic RBI policy.
(The author is Product Head, Finversify)