Update for 29th July 2011

 The Test of 50 DMA ( 5525 ) is On !  

Yesterday's derivative expiry did not lead to any free fall and the expiry was managed in the vicinity of the 5500 strike. It seems that the lower open helped the market to retain the ability to test the gap at the open. However, today's market action of another lower open below the yesterday's range and a test of yesterday's high and 50 DMA  may be indicating a sort of short term reversal. If today's  rally leads to a close above the 50 DMA  or a better close above the 5550 level, then it may be construed that the market is still bound by the earlier tight trading range between the 50 DMA and the 200 DMA. Until the market breaks out clearly out of this trading range, most technical indicators designed to trade trends may continue to whipsaw. However, a failure to clear the 5550 level may lead to a test of lows and even the continuation of the correction.

   Nifty Futures - Daily Chart  

Update for 28th July 2011

 The Battle for the 5500 Strike is On !  

The major option position build up at the 5500 strike is acting as a major battle point in today's trading, although some of the Put build up has moved to the 5400 strike. Some more Call selling was observed at the 5500 strike. Though the option writers would like an expiry at around the 5500 strike, it is still unclear whether this will be managed because of the external factors. The next support for the market below the earlier 5500 - 5520 support is around the 5350 - 5400 area. 

   Nifty Futures - Daily Chart