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The recent eruption of decades-old conflict between Israel and Palestine which turned out into a full-fledged war, came out of syllabus for traders. The weekend further raised concerns over the likely impact on the global markets, which as of now clearly seems to be favoring bears.
Talking specifically about the , the previous high of 19,675 is now becoming the nearest resistance, which will be confirmed if the index does not breach this high tomorrow. So, traders who are long should watch out for this level to timely book their profits.
However, looking at the geopolitical situation, this environment does not seem to be ideal for holding long positions. None of the sectors were able to hold their ground and all of them closed in the red zone today. The Nifty 50 index ended the session 0.72% lower at 19,512.35 as investors fled to protect their capital. The index fell 1.51% to 39,676.75, closing at the lowest level in over a month.
The volatility has also shot up aggressively by 10.6% to 11.4, after falling 10% in the previous week. Crude oil also jumped sharply by over 4% to around $89 per barrel which is negative for the Indian economy as we import more than 80% of our demand. Safe haven buying was also witnessed with crossing above $1,850 an ounce.
So, long positions (if any) should definitely be hedged for any overnight risk. On the other hand, a short position can be held as it is with a stop loss above yesterday’s high. On the lower side, the risk of falling to the swing low of 19,333 has a high likelihood. However, I don’t see the index sliding below an extremely strong support of 19,225 in the current monthly expiry, but if that happens, forget about a new all-time high in this year.
Disclosure: I have multiple options positions in Nifty 50.
X (formerly, Twitter) – aayushxkhanna
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