Analyze the Live OI changes.

4 intervals are marked on this chart from 31-08-2021 and marked as A,B,C,D.

Now we will analyze what happened at each of these marked zones A,B,C,D

Zone -A 9:30-9:40 AM.

In the interval of 9:30-9:40AM being a “call writers” domination in terms of OI. The expected behaviours are as follows.

  1. Sellling reaction of the higher extreme of the range.
  2. Follow-up selling at the lower extreme of the range.

If you observe the actual behaviour you can note the following.

  1. No selling reaction on first retest
  2. Price started consolidating at the higher extreme without seeing a selling reaction.

Conlusion: High extreme not acting as a resistance, Nifty went on to go higher trapping the call writers.

Zone B 10:50-11:00 AM

In this interval PE writing was dominating, the expected behaviour from PE writing is.

  1. No follow-up selling below the lower extreme of the interval’s range.

If you see this chart you can notice the rectangle box is the range of the Zone B and you can notice no follow-up selling has come at the tests of lower extreme.

This range is also a higher extreme of the call writers range from Zone A.

Here in Zone B, Put writers came in at the resistance formed by call writers and price was not weakening.

Conclusion: Rally followed trapping the CE writers and favouring PE writers.

Zone C : 12:30 -12:40 PM

In this interval PE writers dominated, the expected behaviour is.

  1. No follow-up selling at the lower extreme of the range.

Actual behaviour also in line with expected behaviour and post that NIFTY again chose to rally higher.

Zone D 14:30 – 14:40 PM

This interval also is dominated by PE writers and NIFTY didn’t even retrace and went onto rally higher as a trend continuation.

In terms of opportunities Zone B consolidation breakout and Zone C No follow-up selling at lower extreme are two long side trade opportunities that showed up today.

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