PostMortem on BankNifty Today & Analysis of 21 Mar 2023
Today was a different day for me personally, i almost lost focus at around 10.30am & i posted the same in banknifty minds. "
BANKNIFTY i have no clue on the direction - options data/flow is confusing today"
I normally use options flow/data to guess the direction ofBANKNIFTY rather than the direct candle stick or chart pattern. Options data usually does not give false signals unlike chart patterns.
From the open till 12.40 i did not see the options premium or skew happening which prompted me to post that message. Since i dont do straddles - the best non-directional trade was out of my arsenal.
The reason i dont rely on straddles is because of current global scenario. Any time in the day the volatility can shoot up & kick your teeth even before you know it. Most of the traders are pre-determined that they are ready to take a loss to make a profit later.
I do not trade with the mindset to lose. Not that i dont lose money, but i dont make a plan to set a loss amount first & then plan for a lottery kind of win. I usually wait for high probability trade scenarios & only commit when conditions are favorable.
The small range we were in till 12.40, straddlers who held on till 12.40 would have made decent gains due to the time decay.
But who did not square off would have seen their call options go way in the money & the losses quadrupled.
The upmove really started at 12.00 and gained upto 1.42% ~ 558pts by 14.50. This gain shows 2 major things
The bulls are still having lot of faith in theBANKNIFTY that they could drive up the demand even from the low point of the day.
The important resistance of 39742 is broken on the 5mts, 15mts & 1hr chart which means further rally is in the cards.
At 13.14 i posted this "BANKNIFTY 39742 resistance has to be broken for a bias change"
I ended up on the losing side as i strongly felt the rally will not break the resistance. Once it broke it i placed some orders to short the PEs - but they missed the price targets by 10paisa :(
And my 39500/39400 4:5 ratio spread is sitting at a loss !
---
For the 15mts TF, we discussed yesterday about the possibility that it could be in a range. Today's resistance break give it wings. It could soon scale upwards if we have a decent US market close today.
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1hr TF is interesting as bank nifty is back in the range of 39742–41624 after a gap of 7d 22hr ~ 40 hrs.
SinceBANKNIFTY is back in the range - it brings in excellent range based trade possibilities. Iron condor, Iron fly & even credit spreads could work wonders if deployed & adjusted correctly.
---
Contra view: looking at the bank nifty components i did not see a spike in volumes in these banks when the 39742 resistance was taken out.
There is a small probability that it could even be to adjust for the Finnifty expiry - if thats the case then the 2nd half of tomorrow we could see a crash that will take bank nifty below the recent swing low.
BANKNIFTY i have no clue on the direction - options data/flow is confusing today"I normally use options flow/data to guess the direction of
BANKNIFTY rather than the direct candle stick or chart pattern. Options data usually does not give false signals unlike chart patterns.From the open till 12.40 i did not see the options premium or skew happening which prompted me to post that message. Since i dont do straddles - the best non-directional trade was out of my arsenal.
The reason i dont rely on straddles is because of current global scenario. Any time in the day the volatility can shoot up & kick your teeth even before you know it. Most of the traders are pre-determined that they are ready to take a loss to make a profit later.
I do not trade with the mindset to lose. Not that i dont lose money, but i dont make a plan to set a loss amount first & then plan for a lottery kind of win. I usually wait for high probability trade scenarios & only commit when conditions are favorable.
The small range we were in till 12.40, straddlers who held on till 12.40 would have made decent gains due to the time decay.
But who did not square off would have seen their call options go way in the money & the losses quadrupled.
The upmove really started at 12.00 and gained upto 1.42% ~ 558pts by 14.50. This gain shows 2 major things
The bulls are still having lot of faith in the
BANKNIFTY that they could drive up the demand even from the low point of the day.The important resistance of 39742 is broken on the 5mts, 15mts & 1hr chart which means further rally is in the cards.
At 13.14 i posted this "
BANKNIFTY 39742 resistance has to be broken for a bias change"I ended up on the losing side as i strongly felt the rally will not break the resistance. Once it broke it i placed some orders to short the PEs - but they missed the price targets by 10paisa :(
And my 39500/39400 4:5 ratio spread is sitting at a loss !
---
For the 15mts TF, we discussed yesterday about the possibility that it could be in a range. Today's resistance break give it wings. It could soon scale upwards if we have a decent US market close today.
---
1hr TF is interesting as bank nifty is back in the range of 39742–41624 after a gap of 7d 22hr ~ 40 hrs.
Since
BANKNIFTY is back in the range - it brings in excellent range based trade possibilities. Iron condor, Iron fly & even credit spreads could work wonders if deployed & adjusted correctly.---
Contra view: looking at the bank nifty components i did not see a spike in volumes in these banks when the 39742 resistance was taken out.
There is a small probability that it could even be to adjust for the Finnifty expiry - if thats the case then the 2nd half of tomorrow we could see a crash that will take bank nifty below the recent swing low.
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