Nifty Daily Update 26 Sept 2017: Dragonfly Doji provides relief to Bulls

BIG PICTURE SEPT 26st

The market remained below yesterday's close for most of the trading session, though initial few minutes and some pockets between 2 PM and 3 PM saw Nifty go green. Finally it closed very close to the open (and yesterday's close) ... which by itself is a minor victory for the Bulls. The bears pushed the Nifty to 9820 at around 11 AM and from then on, Nifty found buyers all the way till close of the session. 

While Nifty closed neutral at 9871.50 (down by 1.10 points), all broad based indices fared better and closed in the green, with midcaps and small gaps gaining above 0.7%. Sectoral Indices was a mixed bag with Metals and Realty being top two gainers and FMCG and Media were top two losers. IT and PSU Banks closed marginally lower as well. 

The advance decline ratio was far better with 1:0.6 ratio with positive bias. 17 securities gained 52 week high while 38 securities witnessed 52 week low in today's session indicating undertones of bearishness.

CANDLE STICK ANALYSIS

  • Nifty formed a dragonfly doji at the bottom of the current series of bearish candle. 
  • The doji is formed when the opening price and closing price is almost the same therefore the real body of the candle is like a line. 
  • When the open and close is near the top the day's range, with small or no upper shadow and a long lower shadow, it looks like a dragonfly and hence named dragonfly doji. 
  • This is a single candle bullish reversal pattern when formed after a series of bearish candles. 
  • An open above today's close and further upswing would confirm the reversal. 
  • Today's candle shows that the bears did not get any further traction below 9820 and lost their grip to allow the market to close near the top of the day's range. 
  • 9820 to 9850 is also a gap (or window) formed on 13th July and hence a support between the 50 and 100 Day Moving averages.
  • Wait for the initial few minutes at least 15 minutes to understand the direction of the market. If there is clear bullish bias, only then go long. If market is moving sideways, then avoid. 
  • Typical Stop loss for long will be below today's candle and for short will be above today's candle. 

TREND ANALYSIS

  • The Nifty is trading below key moving averages of 5, 10, 20 and 50 days indicating bearishness sentiment for the near term. 27t
  • A break of 9950 would indicate a resumption of the uptrend.  

INDIA VIX AND NIFTY OPTIONS DATA 

  • The PCR Ratio of Nifty Sept series remained at 0.80
  • Trading volumes saw 2.28 million calls and 1.85 million puts being traded
  • Maximum change in OI took place in the 9900 Call which added 1 million OI indicating short build up for this expiry.
  • 9800 to 10000 strike prices provide the support and resistance as per Max OI outstanding. 
  • 9850 saw a short build up on both the call and put side, indicating this could be the battle range for Expiry.
  • PCR Ratio for Nifty Oct Series is at 1.008 indicating the bearish view is a near term view that may last a few more days. However a clearer picture will emerge post expiry of Sept series.


OUTLOOK FOR 27th Sept

27th Sept Nifty Range 9815 to 9891 with support at 9776 and resistance at 9968
27th Sept Bank Nifty Range 23990 to 24340 with support at 23828 and resistance at 24526

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Disclaimer :

This blog is for educational and awareness purpose only. The views are intended for discussion and exchange of views rather than an expert opinion. This is not an recommendation to buy or sell or invest in the stock market and derivatives market. Kindly exercise caution and perform your own due diligence before investing in the market, after fully and clearly understanding the risks involved. 

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