As you can see that index is in correction mode of the rally from 4530 to 5630. This week Index has already hit and broken 61.8% Fibonacci Retracement level. The 61.8% level is generally a magical threshold level for many stocks. Stock generally finds support or resistance around this level during correction. However for NIFTY index this magical benchmark level is at 76.4%. Historical data shows that NIFTY invariably takes ‘U’ turn at this level. Currently this 76.4% correction level for NIFTY index is at 4780.
The highest Open Interest buildup for PUTs is at 4800 suggesting strong support. Most of the Technical Indicators & Oscillators are entering into oversold zone. Therefore we strongly feel that NIFTY index will definitely find support in a range of 4780-4800 for this week. It would make sense to start building long positions as NIFTY approaches this support level with a bounce back target of around 5100.
– Team HBJ Capital