Nifty tested the support zone once again close to 5820-25 and bounced back sharply from those lows.The volatility index ended on a negative note and the premium in nifty futures was moving at a steady level for past 2-3 trading sessions. It indicates people are still bullish on nifty and we could not see any major short buildup because of the mispriced put options. The options table shows decent amount of put writing happening at lower levels and even if it breaks on the downside a bounce back could be expected.On the upside traders got enough opportunity to write 6000 calls during the past 3-4 days and they have utilized it well thus 6000 can be the upper cap. In the daily charts nifty is forming a rising wedge pattern with a steep rise almost at 80 degree which gives some doubts regarding the amount of rise in prices.Thus as of now we could see a range bound scene in the coming days where i should not be a buyer on the break out highs and it could trap the buyers.If we analyse the previous two tops we could see that nifty marked a new high of an existing rally but started falling from the next day and this time also the scenario is almost similar. The good thing regarding this time would be stocks would get an opportunity to form a base or a double bottom where some accumulation could be seen, dollar could form a double top on any rise and so on. In a nutshell if you are an expert options trader these are days to sell options and in these kind of situations one should wait on the side lines to wait for a top to be formed and dont chase the market by buying the breakout highs.
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