On Friday, Nifty opened inside previous day’s range and after a false break of IB low, its moved upside to test IB high which was also PDH (previous day’s high). There was a failed auction above PDH as as we indicated for a bigger fall in case of bigger inventory adjustment (see friday’s pre-market analysis –Pre-Market Analysis: Nifty Future – 14th Aug 2020). This happened and nifty fell almost 300 points form the top making a trend day down. The value area is formed sideways and not down.
What can be expected now:
Friday was one of the biggest intraday fall in some days and we would still classify this a bigger inventory adjustment on downtrend but we need to see if short term sellers have covered up, so that higher time-frame is ready to move markets up or this inventory adjustment is not yet over. VWAP level at 11260 is very important level and prices accepting above this level can go back up to POC (point of control) at 11340 where there might be a last test of bears before we breakout upside. In case, inventory adjustment is not done yet, we might see prices moving down below PDL (previous day’s low) to repair poor references on downside.
Trade plan for today:
Market is expected to open inside range and there is no clarity at open auction. In fact there is not much clarity for the entire day as shorting below VWAP can be frustrating with slow movement, shorting below PDL (previous day’s low) is like selling in the hole and buying above PDL (previous day’s low) and below VWAP level is like catching a falling knife and all these are not good for Intraday trader. the only trade I will look for is going long if prices are accepted above VWAP level of 11260 else i will ignore any trades for the day and watch market development for any future course of action.
- There is no clarity on nifty. We can say Inventory adjustment break is over only in case prices gets accepted above 11260 levels.
- There are equal chances to be wrong and prices can move further down if this is end of uptrend but i will wait for some more days for this confirmation. Market is not going anywhere.
- As always, keep eye on bank-nifty. For Nifty to move up, bank-nifty should be stronger than Nifty as it is lagging in the uptrend, else weakness in bank-nifty can pull down Nifty also.
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.