Nifty bounced back but only for the weekly expiry management?

On June 2nd, Nifty showed a significant upward movement beginning at midday. Initially, the market opened with a substantial gap down of approximately 150 points but began to recover from these low levels. The bullish trend was maintained throughout the day, resulting in a net gain of 100 points by the close. However, it appears that this entire move was orchestrated for the weekly NSE expiry management, as Nifty required additional time to fully adjust to the steep decline experienced on May 29th.

On June 3rd, the strength previously observed in Nifty was absent, with a gap down opening of 70 points. At the time of writing, Nifty has dropped by nearly 250 points for the day and appears to be attempting to fill the gap at 23153, which was created on April 8th with a significant gap up opening. Once this gap is filled at 23153, a new direction may emerge. The MHAF chart consistently shows strong bearish candles, confirming the negative bias we anticipated and supporting our ongoing short position.

Currently, the spreadsheet we developed for trading this strategy suggests that the bearish trend will conclude above 23730, and a new bullish signal is at 23837. Both levels appear to be comfortably distant from Nifty's current position. If there are no significant movements before tomorrow's opening, the potential stop loss and reversal points could be adjusted down to 23567 and 23675, respectively.

Our current trade positions show an unrealized profit of Rs 66,000, with a target reversal point set at 24005, established when these trades were initiated. This is separate from the reversal points previously mentioned in the spreadsheet. This strategy does not utilize those dynamic levels; instead, it depends on the options premiums received to establish the reversal points. We intend to maintain this position unless 24005 is reached soon, or 80% of the potential profit becomes realizable.

Cheers and happy trading.