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

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Observation from previous day:

On Monday, Nifty opened just above PDH (previous day’s high) and went up to tag the poor high from where it started falling. Within minutes , it was back into the range forming an open type called as Open rejection reverse (ORR). We did expected a sideways move and opportunity to sell at PDH (previous day’s high) targetting POC (point of control) and it came immediately at open itself ( see previous post- Inspite of a big down move, Nifty was unable to break PDL (previous day’s low) or IBL (Initial Balance low) and went sideways for the entire day forming a Normal Day. This shows the sellers exhaustion which we are observing everyday from some days now. Here, I would point to a fact that It looks more like Nifty is going to break on upside but when will that happen, no one knows. So till now, it looks like all supply is being absorbed by big OTF (Other Time frame) players. Even if the up-move happens, It might catch everyone off-guard, so there is no point expecting it until it really happens.

What can be expected today:

Again, Today looks no different, we can expect prices to be in sideways zone inside the range but since there was clear sellers exhaustion yesterday, the best place for a long trade would be rejection at PDL. Please note that any short trade taken inside yesterday’s range could be risky. We can look for a short trade at rejection of PDH, but prices are expected to move slowly owning to the exhaustion of sellers which we saw yesterday, so you need lot of patience to hold on to your trades today. This behaviour is expected to continue till a big break happens, so intraday trading would be challenging till then.

Trade plan for today:

Nifty is expected to open inside range and we can again see sideways movement for today. That means, we can again look for trading the extremes, that is sell at rejection of PDH and buy at rejectio at PDL. Any acceptance of prices beyond the range need to be taken with caution and the idea of counter trade needs to be dropped. I will not look for a trade beying extremes as that is no clarity zone, so we can see a sluggish move or a very volatile move beyond that and its in best interest of risk not to trade and sit in cash.

Some cautions:

  1. Yesterday, we saw a clear rejection from PDH but also exhaustion of bears at lower levels, So until bears break PDL in the start, I am expecting bulls to take over the charge today.
  2. Bank-nifty is continuing to be weaker than nifty form so many day, so if we are expecting a big upmove in Nifty, that cannot happen without Banknifty supporting, so keep and eye on banknifty.
  3. Value areas for last two days are overlapping which indicates the accumulation. Now whether that is accumulation or distribution, we will know only when it is clear where oTF wants to move the markets. so this can go on further.

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