Postmortem on #BankNifty - 11 OCT 2022
Bank nifty’s performance today was quite surprising. Opened at 39058 right near where we closed yesterday. Usually BN has the habit of opening gap up or gap down everyday, but today’s open was the first surprise - the trade was almost the continuation of yesterday’s price action.
Secondly the IV (implied volatility) of bank nifty was very low even while considering the India VIX was spiking. I am very sure the bank nifty volatility was very low till 14.45 where it traded in a small range.
From 14.45 to close, if we monitor the fresh shorts at the call side, CE options writers were very active. And the volatility kicked in. Most of the traders would have anticipated BN to trade lower today and would have later changed their view that BN will not fall until say 14.30.
Very few traders would have anticipated the fall in the last 1 hour.
If we look at the far OTM CE premium & the volume. 80 to 90% of them came in the last 1 hour signifying the pick up in the call writing. So a major chunk of traders now believe bank nifty will trade lower in the coming days.
The final close 38646 was below the strong support of 38698. Also Nifty50 fell below the decade long trend line upper channel - few may consider this as a bearish signal.
5mts TF is not showing bearishness - but the break of support is something to be considered
1hr TF is also not showing bearishness, it has to breakdown below 37200 for bear continuation.
Bank nifty important support and resistance lines
s1:37946, s2: 37247
r1: 38698, r2: 39326
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Secondly the IV (implied volatility) of bank nifty was very low even while considering the India VIX was spiking. I am very sure the bank nifty volatility was very low till 14.45 where it traded in a small range.
From 14.45 to close, if we monitor the fresh shorts at the call side, CE options writers were very active. And the volatility kicked in. Most of the traders would have anticipated BN to trade lower today and would have later changed their view that BN will not fall until say 14.30.
Very few traders would have anticipated the fall in the last 1 hour.
If we look at the far OTM CE premium & the volume. 80 to 90% of them came in the last 1 hour signifying the pick up in the call writing. So a major chunk of traders now believe bank nifty will trade lower in the coming days.
The final close 38646 was below the strong support of 38698. Also Nifty50 fell below the decade long trend line upper channel - few may consider this as a bearish signal.
5mts TF is not showing bearishness - but the break of support is something to be considered
1hr TF is also not showing bearishness, it has to breakdown below 37200 for bear continuation.
Bank nifty important support and resistance lines
s1:37946, s2: 37247
r1: 38698, r2: 39326
Thanks for reading Viswaram Finance! Subscribe for free to receive new posts and support my work.
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