Hello,
Nifty has come to the edge of the range. If breakout were to happen, today offers the best chance for the same. Above 5500 Nifty encounters a stronger resistance in the form of the rising channel (in which Nifty is moving for the past 8 month) at 5540. Since this is a trendline resistance, a break out here shall provide us with a target of 6269 - a level that comes close to the all time high of Nifty.
Yesterday we saw a strong reversal in option open interest with short positions in Calls of 5400 and 5500 being cut and fresh shorts in 5400 and 5500 Puts. If this continues today, it should indicate strong support for the markets at 5450 level. PCR for Nifty yesterday rose to 1.57 which is a indication of the same. With Relative Strength Index being at around the 60 level, there is room for markets to rise higher before we encounter a overbought scenario.
Continue to hold Nifty longs while moving the stop loss to 5445.
Regards
Prashanth
Mythri Stocks & Shares Pvt Ltd.,
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