Pre-Market Analysis: Banknifty Future – 28th July 2020

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Observation from previous day:

On Monday, Banknifty opened inside previous day’s range near volume POC (volume point of control) , tested that and then went down to break PDL (previous day’s low) decisively and consolidated below it for the whole day forming a NVD down day. Banknifty looks bearish but only thing to note is that sellers were struggling to take prices down in later half. Also Banknifty has repaired the poor structure with this down move. Virgin POC levels at 21700 is the last hope for Bulls and if that is defended, we can see prices move sideways to upside else if it breaks decisively, we have a higher probability of going to 21150-21200 levels.

What can be expected today:

I am do not have a clarity in banknifty simply for the reason that Nifty is showing some relative strength where as Banknifty is showing clear weakness. Please note that it is easy to Move banknifty than Nifty for big players, so that is the reason Banknifty is more volatile. As a thumb rule, I trust nifty more than Banknifty. and that is why I am expecting the bulls to defend 21700 zone in BNF and move the prices up to get in sync with nifty. Price acceptance above 22100 levels will be a further good bullish sign.

Trade plan for today:

Open auction can be volatile, so we need to avoid open auction today. Later, i will look for a long trade at rejection of PDH (even though bulls might try to defend 21700 – virgin POC levels), i will look for a long trade when prices come back in range just for a simple reason that i do not prefer buying below PDL and selling above PDH (This rule prevents lot of wrong trades). I will look for short in BNF only if price breaks 21700 levels decisively else no short trades in BNF.

Some cautions:

  1. Banknifty is much weaker than nifty but in a higher timeframe, this is also looking like a consolidation near the top of big range, so like nifty (see today’s post), we can expect a breakout in BNF (Bank nifty Future) too in some days- When?? No one knows, so don’t try to catch that.
  2. I am not looking to short BNF because I think its late for a short trade in BNF as risk is more now compared to potential reward, so be careful.

Disclaimer:

Please note that this is a personal view for learning , observational and education purpose and is not a trading recommendation. Trading futures carry a risk, so you should consult a financial expert before taking any risk. Also, Banknifty in above statements Indicate Banknifty future for current month and not Banknifty index.

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