Option Pain Analysis - Jan

The option Pain for the month of January '10 is at 5100 as of 25-Jan. 3 more days to go for the expiry. In fact the Option Pain was at 5100 since 22-Jan. So I have not taken any short position when the nifty was trading below 5000 and the overall sentiment was bearish. The market may attempt to move towards 5100 on wednesday or thursday.

I have not taken any position this month based on Option Pain as the market resembles the October month where it fell nearly 10% in the last week. Instead I will use this as a guide to take position. I am waiting for nifty to trade near 5100 level to initiate short position. Lets wait and see whether we will get that level.



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Bank Nifty - 3 Outside Up

On January 19th 2010, Bank Nifty and HDFC Bank has formed Three Outside Up candlestick Pattern.

Bank Nifty



13 EMA (9078) > 34 EMA (9030) > 55 EMA (9015) -->Bullish.
RSI(14) is at 60 --> Bullish
Stochastic - Blue line has Crossed Red line upwards --> Bullish

Initiate Long positions above 9150.

Possible Targets

9350 - Bollinger Band (20) upper band
9400 - Recent high on 3rd December before moving down
9630 - High on 20th October 2009 before moving down

Stop Loss - 8900

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Three Outside Up - Bullish Reversal

Three Outside Up is one of the most reliable Bullish Reversal Pattern. It has 3 Candles.



First Candle - Small Black Candle
Second Candle - Large White Candle that completely engulfs the First Candle. Volume is higher.
Third Candle - Breaks the high of the second candle and closes high.

Initiate Long position when the high of the third candle is broken.



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