This index has been trading witnin a narrow range for about two weeks now. It didn’t make much effort to breach its 200dma and looks as if this moving average bowed down and moved below the range itself.
Moving averages trying to converge is a positive sign. The RSI, though flat is in the bullish zone. On the other hand, the trend on CBOE Volatility Index (VIX) also suggests that the traders are not expecting any significant weakness in the near term.
200dma, currently around 911 should lend support in the short term while 50dma, currently around 890 should lend support in the medium term. These are also the exit points, respectively for short and medium term long positions. Keep tracking dma or sma positions from time to time.
Traders are expecting an upside target of 1000 to 1020 in short to medium term. But, since we are charting a bear market rally, the markets could also trade around the current levels in a narrow range for days together. So, it would be prudent to book small profits rahter frequently.
Such market conditions are suitable for ‘non-directional’ options strategies.
