1. Indicators :
Daily indicators are reaching oversold zone but are yet to exhaust where as Weekly indicators have starting to come off the long overbought zone and indicating sell signal.
So, looks like some pain may be left before bottoming out happens .
(But remember last three corrections in the channel trading since Oct 09 ,reversals have been swift ,V shaped ,and with no positive diversions of notice. )
The short term 5d volume profile shows that the reversal will come in shortterm only if closes and sustains above 5990 -6000 level .It is also emphasized by the Weekly MP charts (courtsy- Mok) showing the value shifting lower in last four weeks and the last week's POC at 6006 level.
We can guess a reversal in shortterm on Price & Volume basis at a close above 6000 levels.
3. Few Charts :
The Closing Price chart shows the last low close of 5987 was broken on Friday.This level of 5975-90 has been a good support area lately.It is likely to become a Resistance zone till the reversal of trend closes the prices above it.
Check out the trading in the Long term chart and draw a Trendline . The support is near 5750 level or nearby.
Nifty has been trading in a Channel pattern in Medium term (since Oct 09) till the recent breakout couple of months ago .It seems to pull back to the Channel Topline to retest the supports.This will also come near 5700 levels.
The Moving Averages charts shows that the prices have closed below 50dma support.They are likely to test 100dma support near 5750 level. Also the 50,100,200 dma's are bullishly aligned indicating the long term bullish trend is intact and its a pullback in shorter time frame.
A Combination chart of the Fibonacci level charts since the pivot level of 4786 and 5350 along with 100 dma and the Trendline shows a important confluence price area of 5725-5750 level.
The Volume Profile,MP chart and Closing price chart shows 5990-6000 level as Resistance and rest of the charts show 5725-50 as Support area ( if trades below last day low,5860 )
4. Option Analysis :
The maximum O.I. on Call side remains at 6300 strike whereas the Put side max. O.I. has shifted to 5900 strike after 6000 level gave way last week showing bearish undertone. The 6000 strike calls are exceeding the 6000 puts where as 5900 puts are exceeding similar call strike indicating resistance at 6000 level and support at 5900 level. There has been aggresive call writing at 5900 strike after 5935 level gave way in last trading session ,it may be indication of things to come .
As of now it indicates a range trading between 5900 and 6000 levels with downward bias.
5. EW Analysis:
Since 5935 has been taken count ,we take into consideration the Alternate count by which its a continuation of the A-B-C correction and we are trading C Wave of this correction since 5350 .
The calculation and notes for the 'C' wave are given in the chart and we seemed to have achieved it at last low of 5860 level.
The above target is as per theory but in practice the C wave tends to extend the theoritical target at times.
Also this A-B-C correction will be the 4th wave since 4786 .The 4th wave generally breaks the trendline and gives a whipsaw.Since trading near the trendline (see the combination chart above )if gives such a whipsaw ,than the next higher low above the trendline will also be a sign of reversal .
so the Trading Mantra this week should be-
If 5725-50 zone comes in first half of the week ,book the shorts and than stay neutral till expiry.
If bounces from here in first half , go short with s/l of 6000 level on closing basis / (Trim longs), till expiry and part book at 5850 level and part below. (One may also look to buy 5900 /5800 puts in this case (small qty ) and trade the levels or write 6000calls.)
The week will be volatile and may trade both ways above and below 5900 levels. Pl be strict in using stoploss.