Nifty took a pause after a great rally of 100+ points. We could see SBI rallying above 2350 levels and I think it was the right day to take some 20% of your investments in SBI. It does not mean that it would come down immediately but it could be the ideal way of booking some profits. Turnover data of equity market shows that it was a day with some higher volumes, but the volatility index is showing some heavy short build up at the top. Building up of short positions on the top does not mean that it should come down immediately. If we see the market rallies right from 5300 we could see short build up at the top but eventually all these shorts got covered up and market rallied on the upside. Thus search for an opportunity on any dips to get inside. We have multiple support levels lying at 5440 and 5330 and these would be ideal points for squaring off any long positions for trading purpose. As nifty is not taking out any previous swing lows it is still in a strong position and we can still maintain a target of 5600+ on the upside but use higher levels to exit and it does not make sense to get into this crazy market with out a correction. It is true that people need to get convinced of a correction as it was such a huge rally. Thus limit your buying positions from an intraday perspective and it is better to trade in at the money options as we can get it at a cheaper rate as we are close expiry. In the medium term we need to closely monitor the movement of dollar index and crude oil. Interestingly these two charts are also kind of a bottoming out pattern and nifty would never move in the same direction. Thus moving forward these are the two major components that would lead nifty to another level. Let’s keep the range as 5440 - 5625
