Pre-Market Analysis: Bank-nifty Future – 26th Aug 2020

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Observation from previous day:

On Tuesday, Bank-nifty opened above previous day’s range and tested PDH (previous day’s high) and moved upside giving a OTD up (open test drive), but this initiative buying got exhausted after the first 15 minutes and as a result of this exhaustion, sellers pitched in to take Bank-nifty back into range form where it was rejected . Bulls again took prices to IB high (Initial Balance) and tested swing high also in this process from which again there was a rejection but prices managed to close above previous day range in the end and value area shifted upwards. Clearly, bank-nifty was stronger than Nifty throughout on Tuesday. The day formed was a neutral center day at the swing high which shows indecision.

What can be expected now:

As value area is formed upside, the uptrend in bank-nifty is still intact. Only issue was that the trade facilitation by buyers was not good on upside. We need to see prices acceptance above PDH (previous day’s high) for any good move on upside, other wise we might see an inventory adjustment break in shorter time-frame.

Trade plan for today:

I would be looking for a long trade in bank-nifty only above PDH (previous day’s high) . A break or test of PDH (previous day’s high) would be ideal entry for long trade but prices should move quickly upside then and not see exhaustion. In case, Bank-nifty remains inside previous day’s range or gets rejected at PDH (previous day’s high), I will not be looking for a trade. Also, i will not look for any short trade in Bank-nifty today until there is a clear indication of weakness on both indices.

Some cautions:

  1. Bank-nifty is stronger than Nifty and is right now at swing high. If it breaks out above this high, we can see a big move to upside but nifty has to support this move.
  2. Until Nifty remains sideways and not bullish, we might see this choppy move in Bank-nifty like on Tuesday.


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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