Nifty Support & Resistance Levels Using Technical Analysis & OI Data on 7th Jan, 2021


Nifty OHLC on 7 Jan 2021

From yesterday’s close of 14146.25, Nifty opened with a gap up of 107.50 points at 14253.75, making a new all time high for the 9th straight trading session. It registered a new high of 14256.25.

Soon after the opening, profit booking took place. It was clearly a sell on rise day and Nifty gradually declined to make a low of 14123.10. As mentioned in our previous article, 14100 level acted as support and Nifty managed to close above it at 14137.35.

Nifty OHLC on 7 Jan 2021
Nifty OHLC on 7 Jan 2021

What does Nifty’s Chart tell us?

Though Nifty managed to register new all time high, it did not breakout of the channel. Two red candles at the top of the channel are not looking great for Nifty and looks like it is consolidating at the top.

It either needs to breakout of the channel or break the 14000 mark, for a decisive move on either side. The channel keeps extending and the upside target of 14480-520 remains intact in case of a breakout of the trend line.

Resistance: Channel trend line

The support levels remain the same in case of any correction i.e. 14000 as strong support followed by 13820-13780 zone.

Supports: S1: 14000, S2: 13820-13780 zone

Here is the chart for your reference:

Nifty EOD Chart on 7 Jan 2021
Nifty EOD Chart on 7 Jan 2021

Nifty Open Interest (OI)

Calls: Looking at the next week’s contracts i.e. 14 Jan 2021 expiry contracts, the highest OI on the calls is at 14200 strike and the next highest at 14500. 14200 may act as an immediate resistance.

However, tomorrow will be the first day of 14 Jan 2021 expiry and data need to be monitored for a better picture.

Puts: The highest OI on the puts is also at 14200 and the next highest open interest is at 14000 strike. So both chart and put OI indicate that 14k will be a crucial support going forward.

The IV (implied volatility) at 14200 strike is more on put side than on the call side, which is in favor of the bears.

Daily RSI is at 73.56 and cooling off a bit from 76.83!

Conclusion: Putting everything together, I’m not so optimistic for this week.

1. Nifty is facing channel trend line resistance
2. OI on the call & puts, IV are in favor of bears
3. RSI is cooling off

Apart from these parameters, the news of new corona virus strain is also increasing day by day. We’re also nearing the budget sessions which will kick start from 29 Jan 2021 and markets will be eagerly waiting for that. Joe Biden will also take the office on 20 Jan 2021 and the world will be watching.

Happy trading! Hope this helps, and do share if you feel this information is useful! 🙂

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