Bears Not Loosening Grip, But Buying Emerges On Dips
On Monday, the technical analysts stated that the Nifty50 index opened flattish. It was witnessed sustained selling. For the major part of the session by hitting an intraday low of 10,302. However, the analysts also observed. That the buying interest emerged at lower levels that helped the index recover almost 80 points to settle at 10,378.
Investors can spot that the index formed a bearish candle on a daily chart. It implies that the bears are not loosening their grip on the market as the heading says that “the Bears Not Loosening Grip, but Buying Emerges on Dips”. From last three sessions, it is observed that the index is making lower highs and lower lows. If the index sustains below 10,450, then weakness is expected to continue and take the Nifty50 towards 10,333 and then 10,276 levels. However, on the upside, instant hurdles are observed at 10,480 and then 10,550 levels.
Some of the experts gave their view and stated that the maximum Put open interest on the options front stood at 10,300, followed by 10,000. However, the maximum Call OI was at 10,600, followed by 10,500. Veteran experts also informed that the option band signified a trading range between 10,300 and 10,500 levels. At present, the India VIX moved up 1.58 percent to 16.63.
For most of the part of the session, Bank Nifty opened in the positive. However, it witnessed sustained selling pressure before settling at 25,058.
Here are some details about the Bull Trap for those who are new to this subject. Usually, a bull trap is said to occur when a trader or investor buys a stock that is about to break out above a resistance level. This is a common technical analysis-based strategy. While most breakouts are preceded by strong moves higher, there are some cases when the stock quickly reverses direction. It is called bull traps as the traders and investors who bought in are trapped in the trade. From a psychological standpoint, bull traps occur when bulls fail to support a rally past a breakout level, which could be due to a lack of momentum or profit-taking. It is expected that on the opportunity to short-sell the stock, bears may jump to send prices back below resistance levels. This will again trigger stop-loss orders from the originally bullish traders. Further information will be provided to you by the technical analysts of Money Classic Research.