Nifty bounced back but only for the weekly expiry management?

On 2nd June Nifty displayed a strong up move starting from the midday. Before this, the market opened with a huge gap down of about 150 points but started recovering from that very low level. The bullish move was well sustained throughout the day until the closing for the day with a net 100 points gain. However, today it seems the entire move was articulated for the weekly NSE expiry management because Nifty needed some more time to truly accommodate the sharp fall it witnessed on 29th May.

On 3rd June the said strength witnessed in Nifty was totally missing with a gap down opening of 70 points. As of this writing, Nifty is down by nearly 250 points for the day and seems to be trying to fill the gap at 23153 which was created on 8th April with a massive gap up opening. Once this gap is filled at 23153, we might see new direction emerging. The MHAF chart is consistently forming strong bearish candles confirming the negative bias we anticipated and took the ongoing short position.

As of now, the spreadsheet we created to trade this strategy is indicating an end of this bearish trend to be over above 23730 and a fresh bullish trigger is sitting at 23837, both of which seems to be comfortably away from the current level in Nifty. With no major movement hereafter till tomorrow's opening, we can see the potential stop loss and reversal points would be lowered down to 23567 and 23675 respectively.

Above is our current trade positions with a Rs 66,000 unrealized profit and a target reversal point at 24005 which was fixed at the time of taking these trades. This is not directly connected to the reversal points mentioned earlier as seen in the spreadsheet. This strategy doesn't use those dynamic levels but rely on the options premiums received to determine the reversal points. We plan to hold this position if 24005 is not reached soon but 80% of the potential profit becomes realizable.

Cheers and happy trading.