Pre-Market Analysis: Nifty Future – 31st July 2020

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Observation from previous day:

On Thursday, Nifty opened inside range an moved sideways for a good amount of time but buyers were unable to take prices up and in Mid-day Nifty broke PDL (previous day’s low) and closed at the lows of the day forming a NVD (normal variation day) on downside. This was not what we expected though, as we expected bulls to take prices above, but it seems there were not interested or may be absent. Now , there is a sign of clear nifty exhaustion and today seems to be the last hope for bulls if they can defend 11040 levels. One thing however to note is that , all this down move is happening in the last hours of the day which is not a good sign for Sellers too but anyway for now, sellers have upper hand.

What can be expected today:

I am still bullish on nifty but today is the day of caution. We can expect nifty to open at lower levels and we need to watch carefully the price action at PDL (previous day’s low) and at 11040 levels. We can look for a long trade if nifty tests these levels and get rejected (point is to wait for these levels to get tested before taking a long trade – this is because higher time-frame bulls have to confirm no pending business below these levels if they wanted to take market up). I will not rely too much on any up-move without testing these levels. If prices breaks 11040 levels and accepts below it, then i will change my view to bearish and will look for shorting opportunities.

Trade plan for today:

Open auction does not have any clarity. Prices can move in any direction during open so its best to let them settle and then observe. I will take a long trade only in case prices gets rejected below PDL (previous day’s low)and comes back inside range (please note the test is very important) . If prices are accepted below 11040 levels, I will look for a shorting opportunity and the best place to short would be any re-tracement to VWAP.

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. Nifty and Bank-nifty are not at crucial level and what they will do today may decide the future course of action for next few days.
  3. If you do not have clarity, its best to stay away from trades and just observe what market is doing.
  4. Today is the last day of the month also and last day of week also, not a caution but just an information.

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, Nifty in above statements Indicate Nifty future for current month and not Nifty index.

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