Nifty Trend Reversing - Volume profile with Neo wave countsAug 11, 2023
Volume profile along with Open interest analysis is important for option traders. This combined with advanced Elliott wave – Neo wave counts provide trading opportunity.
It is time to get cautious as prices are failing to break above the important hurdle of 19630 levels and reversed down post RBI policy announcement on 10th August 2023.
Nifty Volume profile chart:Nifty volume profile chart shows that big activity has happened in the range of 19600 – 19500 levels. Prices are now at Volume Point of Control (POC) which is the highest volume node indicating exact level where positions are created by big players. Break below 19400 will be sign of Bull trap resulting into move on downside as long as this volume node remains intact.
Nifty Open Interest profileNifty Open interest also shows sharp rise in 19500 calls open interest (green) but the put side (red) has not given up yet. Further break below 19420 will result into panic and covering by put sellers thereby putting pressure on prices unless move back above 19520 is witnessed.
Thus Open interest and Volume profile are both indicating similar outcome and shows areas where big players are creating their positions. This is behind the scene analysis and gives the much needed conviction for trend identification and reversal areas.
Nifty hourly chart with Neo wave -Nifty Neo wave shows the entire rise as double corrective pattern. The first pattern is Diametric that completed near 19450 and then x wave formation. Post that prices moved up in form of wave a. So far the fall is in form of wave b which is not yet over. So one leg looks to be pending on downside before we see any meaningful bounce back as long as 19600 remains intact on upside.
Thus by combining big players activity seen from Open interest profile, Volume profile along with Neo wave one can form clear trading strategy must for trader with stop, targets and favorable risk reward.
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