Nifty continuing it's bull run but with signs of exhaustion

On Friday, June 12th, Nifty broke out of a consolidation zone with a gap-up opening, followed by the formation of strong green candles on both the price and MHAF charts. This movement also triggered a new buy signal. However, we did not immediately reverse our short-biased position because our predetermined reversal point was set at 24042. Since then, we have been waiting for this reversal point to be breached, which occurred yesterday, June 17th. On that day, Nifty began with a strong opening and maintained its bullish momentum throughout the day. It not only surpassed the high of June 15th (24011) but also exceeded the previous swing high set on May 26th at 24090.

As Nifty closed the session at 24085, surpassing our targeted reversal point, we closed the long futures position with a Rs. 80,600 loss and initiated new long futures in Nifty at 24045 (we secured a favorable entry since the trade occurred about an hour before the session ended). At the same time, we established a hedged position to decrease the overall position delta by shorting June 24100 call options. We slightly deviated from our established strategy, which required us to open double the quantity of our standard lot size (260). Instead of shorting 520 qty of 24100 CE, we shorted 780 qty. This decision was made because it was already the 17th day of the month, with only 8 trading sessions left for this series, and the time value of the 24100 CE was insufficient to ensure wider break-even points on both sides. If we had shorted our standard 520 qty, the downside BE would have been at 23788, which seemed too close, given that Nifty had already moved significantly upward and a quick correction could easily push it below that downside BE.

We aimed for a more comfortable stance with additional BE points to avoid entering the third leg (short bias again) of the basket trades in this June series. Based on the table below, our existing position remains secure as long as the current month's expiry occurs precisely between 23,448 and 24,752, both of which are significantly distant from the current Nifty level.

The spreadsheet we use to calculate triggers and assess the overall Nifty sentiment confirms the bullish trend mentioned earlier. The buy trigger at 23,349.49 on June 12th is currently showing a favorable hypothetical profit, with the trailing stop loss adjusted over the last four trading sessions. As of the market opening on Thursday, June 18th, the stop loss is set at 23,749.25, and a potential reversal sell trigger is positioned at 23,640.73.

Cheers and happy trading.