Observation from previous day:
On Wednesday, Nifty opened above previous day’s range with a gap indicating a follow through attempt by buyers but it moved sideways in narrow range for entire day forming a non-trend day. Now, there is confusion whether short time-frame smart money has accumulated or distributed in this narrow range. We will get confirmation only after the prices break this range on either side but we need to observe few things. Value area is formed above Previous day’s range which is bullish sign and indicates absorption of supply. Also, sellers failed to move prices back into range and price eventually closed above previous day’s range which is again bullish. Only thing which is against buyers is that the trade facilitation was very poor which is evident by the formation of PPOC (prominent point of control).
What can be expected now:
There is not much clarity and we need to observe price action carefully to get further guidance. Price acceptance above PDH (previous day’s high) is bullish and price acceptance below PDH (previous day’s high) will not be good for buyers and till prices are accepted above the VWAP of trend day (11345) levels, it can continue to move sideways. Sellers will take control only when prices are accepted below POC (point of control) of trend day which is also virgin POC at (11320) levels. Today is also expiry and option writers will try to keep prices inside range.
Trade plan for today:
SGX nifty is indicating a huge gap down open below today’s range due to overnight sentiment. So, open auction trade is going to be volatile and its better to stay away and let the prices settle. There is no point of looking for short trades till prices comfortable accepts below VPOC (virgin point of control) levels of 11320. There is a very high chance of down move getting rejected but please remember that anything can happen in market. I will look for a long trade only if prices get above POC (11430) levels and short trade only if prices are accepted below 11320 levels later in the day.
- Today is expiry and an unexpected gap down open, so expect some volatility.
- Bank-nifty needs to support nifty in any up move. In fact bank-nifty needs to show more strength compared to nifty, so watch out Bank-nifty carefully.
- No position is also a position. Its not needed to trade everyday.
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.