Observation from previous day:
On Tuesday, Banknifty opened inside previous day’s range and Broke PDL (previous day’s low) to test virgin POC (point of control) below PDL (previous day’s low) and as we expected (https://onerighttrade.com/index.php/2020/07/28/pre-market-analysis-banknifty-future-28th-july-2020/), buyers pitched in below PDL and took the prices back into range to closed above IB high forming NVD (Normal variation day) upside.There was this trade idea also given for a long trade ig prices come back inside range at rejection of PDL (previous day’s low). Anyway, After some days of weakness, we saw a little strength in banknifty but relatively, it is still weaker than nifty. So, if bank-nifty starts trading above PDH (previous day’s high), it needs to catch up with nifty. SO, PDH (previous day’s high) is very critical level in bank-nifty.
What can be expected today:
Bank-nifty nifty can remain sideways if it opens and trades inside yesterday’s range. but once it breaks and accepts above PDH (previous day’s high), we can see strength in bank-nifty, so it is advisable to look for long trades only above PDH (previous day’s high) and rest can be ignored. Only if bank-nifty breaks PDL (previous day’s low), we can look for a short trade opportunity but until that happens, any short trade is not advisable.
So, the expectation is that bank-nifty will open near PDL (previous day’s low) and continue the up-move . The levels to look out for on upside is 22620 (very important- weak high) and 23000.
Trade plan for today:
Open auction in bank-nifty can be volatile, but if prices are accepted above PDH (previous day’s high) in first 15 minutes, then we can look for a long trade. Do not look for a trade if prices remain sideways and look for a short trade only once they break PDL (previous day’s low).
- Bank-nifty needs to show strength now and that is very important. Till now, sellers seem to be focused on bank-nifty and if they start covering up, then we can see a good rally in bank-nifty.
- Watch out for Nifty and 11420 levels, if that is taken out, it would mean we are in uptrend and Bank-nifty will sooner or later start supporting nifty.
- If sellers manage to take prices below PDL (previous day’s low), then ignore the long view both in nifty and Bank-nifty and the best thing would be not to be in trade.
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.