Nifty gave a smart rally in the previous week and it has some tougher levels to cross around 5200 and thus it could confirm the bottom of 4700.If it has to cross 5200 levels it has to happen on 17th or 18th or it is due to correct to 5000 levels and find a bottom around 20th of October.The move on the upside could be relevant if it corrects to 5000 levels and come again to break 5200 levels. As i was saying through out the last week as i trader i would have squared off my longs above 5100 levels and wait for further buying till 5000 levels or above 5180 levels.It would be strictly a no trade zone from 5100 + to 5180 levels . How ever when ever there is a dip to 5000 levels people who are waiting on the side line would jump in to create further buying positions.Volatility index has cooled off and if it comes to 22-23 levels it would be a time for buying options as option prices would become cheaper and India VIX has to come to its mean around 30 levels.If you read the volume data it looks like over extending the upside to make a trap. Lot of profit booking could be seen at higher levels of 5120-5140 especially in Nifty futures and institutional buyers have exited the futures market and they might come only above 5200 levels.
If nifty would is able to cross 5200 levels convincingly by giving a closing above these levels it could extend the rally to 5350 levels. If it rallies to 5350 without a correction price would exceed the time factor and i expect it to come back to test 4700 levels to make a balance between price and time.
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