"the donkey pulls the pin on NAB ..."

Back on August 2nd I looked at the option chain for NAB and it seemed to suggest that the smart money was hedging at around the $32.50 mark indicating that in the short term over August the direction was predicted to be up from the current low around $29.50.

Looking at the price chart below we can note 4 things :

1. The price trend and regression pattern have in fact been upward trending since the beginning of August.
2. Within the current wave 3 is a sub 5 wave count indicating that the next price target is around $33.19 and confirms the earlier price prediction of a $32.50 price target based on the open interest and volumes in the early option chain denoting where the expiration PIN risk might be for NAB.
3. Finally, I like to use the ADX as an indicator for entry and exit. The key element worth noticing below is that the DMI + & - lines are diverging quite strongly and the ADX line is moving up quite strongly indicating a strengthening pattern. Technically we would look to enter a trade with strong divergent DMI lines once the ADX line is between the two DMI lines and this looks to be about to take place next week.
4. If you follow Elliott wave and Fibonacci, one of the guidelines is that if you break one Fibonacci level you are heading to the next, which in our case is the 100% extension level at $33.19

NAB price chart - 23rd August 2013

Another point of reference for the Elliott Wave enthusiasts in the above price chart is that the inner 5 wave sequence shows a wave 4 retracement which halts right on the 38% point which is a classic retracement point.

The next step in refining this type of analysis is to check the option chain for August at expiry to see if the PIN risk prediction for August is confirmed and whether the September chain volumes are still indicating a retracement to the low $30's as this would be in line with the Elliott pattern shown above.

Cheers