Nb. Our comment from the 10/03/2022
As we said last week it certainly was a fantastic battle the market had with R3 at 6950, and it was on the Monday as well.
In fact, we thought it might just have been a case of job done when the market bounced right back int the 7000’s, and held there on the Tuesday.
Wednesday was the crunch day, and although the official open (always the previous days close) was 6984.59, in the real world it was nearer 6918.
What this meant was that is gapped down at the open to below R3 at 6950, if it was even still there in fact.
As you can see from the above table 6950 is now R2, having lost a third of its potency. The trouble is that we don’t know when that changed, and it could easily have been on Wednesday.
The fact that R3 is now 6850 and the last three intraday lows have been 6836.28, 6829.29 & 6840.07 does tend to suggest this as well.
Without calculating the ratios daily, we have no way of knowing, sorry.
So, apart from the ratios below the zone all looking weak, the other big news is the zone itself.
And it is not a small drop either, but a 200-point fall.
The upside, is perhaps that come the rollover and expiry, that this might be far more attainable but, the not so good news, is that there is still three weeks left in this expiry.
Obviously, falling ratios coupled with a falling zone are both bearish, as is the rising ratios above the zone. However, R3 does still seem to holding its own.
Plenty of upside now, the only question is will 6850 remain at R3 to give some downside protection?
Range: 6850 to 7050
Activity: Good
Type: On balance just bullish
Nb. Our comment on 10/10/22
Despite the fact that R3 had retreated to 6850 last week, it seems the market hadn’t realised.
As R2 at 6950 evidently produced enough dynamic delta to achieve the same result, with the intraday lows on Thursday and Friday being 6961.10 and 6960.36 respectively.
If the market should go back there again even R2 has retreated, back to 6900 now but, with another drop in the zone, this now makes 6950 not only R1 but also the bottom boundary of this new zone.
Again, a falling zone coupled with falling ratios below and rising above are all bearish signs.
And don’t forget this market has already tested R3 (when it was at 6950 on 26th Sept with the intraday low of 6937.40), so the fact it is now at 6800 means that this market is not out of the woods yet.
However, if it can stabilise in its fallen zone, and the ratios either side can also stop, or change, their direction of travel then it might give a chance to the bulls.
Especially as we now have only two weeks to go in this expiry.
And with the way this expiry has evolved, above the zone you now have 300-points of just the minimal Y ratio. A level of ratio that should hold no fear for an index that has been messing with R3 and R2 levels already.
Of course, so far this expiry it has been one-way traffic, don’t forget the “opening” price on day 1 was 7236.68, and back then the zone was 7250-7350 and all the Y ratio was below it.
Almost the mirror image of what it is now, and back then, on the 20th September, did you think that the market would go down through all that Y ratio until it hit the R ratios?
Range: 6950 to 7050
Activity: Moderate
Type: On balance definitely bullish
