Wednesday, 3 August 2016

Divergence in Nifty Movement & Its Indicators!!. Cash volume increasing with decrease in price.

There is a clear divergence seen in MACD, RSI as Nifty moved higher from 8300 to 8600 while the indicators showing negative divergence which suggests this will correct soon around 8300. A rally towards 8600-8700 should be used as a opportunity to short the Market. On the other hand cash volumes are higher above its 10 days average volume & Nifty is coming down which suggest Market participants are selling their deliveries & booking profits. 8541 is now a 20 days volume weighted average below which there is support coming on 8304 which is 50 days volume weighted average. 
Open interest in Call Options at 8700 strike to 9000 strike has gone up substantially, which suggests even if Nifty tries to go higher from here there will be hurdles at each level. On the Put Options side at 8300 highest addition was seen of 6 lakhs contracts, but 8500 is still highest Put base for August series. So the Crucial level is 8500 to watch out. Since the sentiments are positive every dip is bought in, so 8300 might be a fair entry level for next leg of up-move. 

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