Pre-Market Analysis: Bank-nifty Future – 31st July 2020

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Observation from previous day:

On Thursday, Bank-nifty opened inside previous day’s range with an open low. We were expecting buyers to take prices upside but seems they were not interested and there was pending business to be done below PDL (previous day’s low). Prices broke PDL in second half and closed at the low of the day and the last poor structure (poor low) we had market on the chart was repaired. So now, this is a do or die kind of day for bulls and they need to defend the mark down by bears. For now, sellers seem to be in control but they have to move prices down quickly below PDL to still be on control.

What can be expected today:

We can expect buyers to defend PDL, sellers will try to break PDL, so open auction will be interesting. Also, its a good idea to just observe open auction for sometime before forming a bias for today, but i feel its relatively simple in bank-nifty today compared to nifty . Prices trading below PDL will be bearish, between 2156 to 21960 will be sideways to bullish and above 21960 will be bullish.

Trade plan for today:

We might see a struggle between buyers and sellers near PDL (previous day’s low) in open auction, so its best to wait till prices settle in. I would be looking for a short trade if prices get accepted below PDL(previous day’s low) and a long trade if prices get rejected below PDL (previous day’s low)and comes back in range. prices moving above 21960 levels will be further good for long trades but we need to watch this level carefully if it comes.

Some cautions:

  1. Please note that today is the first day of new series, so yesterday’s chart was of July series and Market will plot August series today, so its not advisable to trade open auction and let market settle in with the prices and take into account the adjustments needed.
  2. Bank nifty has repaired poor structure, so if it has to move up, it should be from here else we will see lower levels and BNF (bank nifty future) will be in control of sellers.
  3. Though we were expecting Nifty to pull BNF (bank nifty future) up but it seems BNF (bank nifty future)was able to pull nifty down yesterday and that was a contradiction to our view.So, in trading, you cannot be right always and you have to then adjust.
  4. Remember – Amateurs want to be right, pro traders want to make money and there is a difference between the two.

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, Bank-nifty in above statements Indicate Bank-nifty future for current month and not Bank-nifty index.

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