Red Days are back

Before moving ahead let us clarify that this Friday was a non working Friday for the Indian Markets so we will have to take into account the working of Thursday and Friday into account of other global indices.

Thursday ended as a great Bull week but what ended up post NIFTY closing in the Global markets was hard to believe. Since Thursday closing Dow Jones has shed more than 1000 points. Singapore Nifty has shed more than 600 points and Nifty will definitely follow these Global cues and is all set to open 500-700 points down from its previous close.

Reasons:

1. Trumps recent tweet against the Chinese.
2. Rumours that China may convert its currency into Dollars to avoid sanctions and claims from other countries.
3. Market topping out, as we have rallied 2400 points from our previous low of 7500 levels.

Data Check:

1. Highest OI in Calls stands at 10,000 strike (1,087,275 shares) which will act as a crucial resistance.
2. Highest OI in Puts stands at 9500 strike (1,018,275 shares0 which will act as a crucial support.

But there is a catch. That is Nifty Futures current price,

Source: https://Investing.com

So looking at this we are expecting a Deep red Opening.

9393 level is a 38.2% Fibonacci Retracement level (In Layman’s term, 9393 should not be broken by NIFTY).

Next level is 8670ish level’s. So if 9393 is broken, Nifty opens up it’s fall range by more 600-700 points, which is scary.

(Note: Fibo Retracement from All time High of 12430 level to Recent low of 7510 levels)

FROM OPTION CHAIN POINT OF VIEW

1. We have seen heavy put writing from 9500-10k strike prices and these people will come to cover their long and which will lead to long covering and will push the market down.
2. 9500 will no Longer act as a support and next strike which has the highest OI is 9000 strike (PUTS).

So, we are expecting to see NIFTY around 9200-9050 range. (9038 is another important, recent swing high).

VIX Check :

1. USA vix is at 37.19 level.
2. India vix is at 33.99 level.

India Vix will try to catch up with USA vix and we expect it to move up by minimum 10-12% causing more volatility and which will result in markets going down by atleast 6-7%.

Conclusion: We can conclude that Red days are back and NIFTY is all set to go down. So our 2 cents will be to avoid bottom fishing and wait for somedays. Specially intraday traders and brokers. 9200-9000-8700 ARE OUR LEVELS FOR NOW IN NIFTY.