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Nifty

Despite the occurrence of narrow ranged candles the index is yet to register a negative close or even slip belowits previous daysswinglow. Though the move post the ‘Exhaustion GAP’ has been tepid a reversal sign would be awaited to reverse the trade. ‘ExhaustionGap’usually occurs at the end of a trend or at an important support or resistance level which is placed around 17480 ( Weekly GAPresistancezone). This set of Gap sequence ahead of the key RBI policy event could be a sign of caution & hence a trailing stop strategyshouldbeadhered strictly while carrying forward any trading longs. Trend strength indicator RSI at 77 has hit its overbought zone but thereisnosign of any divergence in strength while ADX is still in a upward trending mode at 41. Hence, it’s too early to decide on a probabletop&hence a confirmation on the reversal side would be awaited. It’s ideal to remain cautious & advisable to deploy a sizeablehedgeagainstyour longs. While booking profits where ever necessary post such a vertical run-up too remains a prudent strategy as the niftyinchescloser towards its expected resistance zone around 17480 for this series.For the day the option data indicates 17350-17550tradingrange while option pain is set at 17300 which should see an upward shift towards 17400. For Bank Nifty the option pain is at 37900which we believe could see a significant shift higher towards 38400 as the index remains relatively better on trend strength.

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