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Nifty

Profit booking around the resistance zone was evident as the index failed to sustain its morning gains eventually falling back belowits 200DEMAzoneof 16700. Though it managed to close above its 20 DEMA zone but the price formation is not convincing for an immediate breakthroughabovethecritical mark of 17000. Gap support around the 16400 mark could be an ideal zone to re-establish leverage longs as we believe that the indexmayoscillate within the 17000-16400 zone before it breakout above 17200 zone.Trend strength indicators are not so confident as ADX is slidingbelow30while RSI is near its critical hurdle around 50. Options data broadly suggests 17000 to remain a concerning hurdle for the week while the floor seemssetat 16600 which looks fragile for short term; a breakdown below the same could drag the index towards 16400 in no time. PCR OI at has slippedto0.90is still not comforting for aggressive longs for the current truncated week & hence uptick towards 17000-17100 if any should be utilised toreduceleverage & await for declines to re-enter in the future. Strategy for traders to remain cautious with their leverage longs as volatility still remainshighuntil India VIX quotes above its 25 mark. Its ideal to remain cautious & continue to retain the mean reversion trading approach throughout theweekuntil breakout above 17200 occurs on its weekly scale.

Nifty Chart

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