Pre-Market Analysis: Bank-nifty Future – 25th Aug 2020

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Observation from previous day:

On Monday, Bank-nifty opened inside previous day’s range and with a big move in the the first 15 minutes, broke PDH (previous day’s high) as well as all poor structures on upside to close at the top. It formed a NVD (normal variation day) upside (NVD only because of a high IB) , which was more like a trend day with good trade facilitation on upside. With yesterday’s move, bank-nifty is very close to swing high of the higher time-frame consolidation zone and we need to see if it breaks out of that on upside.

Looking at the structures of consolidation and absorption of supply, the expectation for Bank-nifty is to break on upside and this break can result in a very good move to upside. but, we need to see observer markets when they open to see if we have any confirmation on out analysis.

What can be expected now:

Trade facilitation by buyers was very good in bank-nifty. So the expectation is of a follow through on bank-nifty to the upside. If there is no follow through and Bank-nifty does not breaks above PDH (previous day’s high), it can move sideways. So we need to observe price auction carefully at the start of the day.

Trade plan for today:

I will be looking for a long trade at break of PDH (previous day’s high) in bank-nifty. The only hurdle I see above PDH (previous day’s high) is swing high at approx 22140 levels and that is important because sellers entered at that level many times in past but that also makes it a weak high and a break above that level can make way for a very good upside in bank-nifty. i will not look for any short trades on bank-nifty today.

Some cautions:

  1. Now as we have moved above the shorter consolidation zone in both Nifty and bank-nifty, we can say that Buyers are in control. SO, it is not a good idea to take any short trades until buyers seem to be losing control.
  2. In case both indices – Nifty and Bank-nifty show strength today, I think Bank-nifty can show a bigger move to upside than Nifty.

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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