Observation from previous day:
On Monday, in our pre-market analysis, we talked about a break of either side of the broader sideways move of approx 200 points (10280 to 10460) and a break on either side can give a good move. Yesterday, Nifty opened inside previous day’s range with open-low and broke PDH (previous day’s high) immediately and then moved sideways sometime above PDH (previous day’s high) absorbing all the supply to finally break this consolidation zone on upside forming a trend day up but with two distributions like a double distribution trend day . It did retraced some points in the end but that is still a healthy re-tracement as closing was above this sideways zone.
Now with this movement yesterday, we have some clarity that probably this sideways move was some kind of accumulation on shorter time-frame and absorption of supply on higher time-frame, and this need to be confirmed through a follow through on upside. Remember , Market is dynamic and it can do anything it wants and we need to see confirmation of our analysis first and every time before we plan for any trades.
What can be expected now:
As Nifty has moved above the consolidation zone, the expectation is for nifty to move upside, and it should not come back inside the consolidation range, So, VWAP at 11460 becomes very important and should hold for any up-move. Also, we need to watch out for trade facilitation by buyers and expectation from them is a good trade facilitation on upside.
Trade plan for today:
I am bullish on Nifty and I will be looking for an open auction long trade in case nifty opens above PDH (previous day’s high) and tests PDH (OTD up – open test drive up) or at the break of PDH (previous day’s high) if open is inside range. i will not be looking for any short trades in Nifty today at least in the open auction.
- Nifty has moved again above Swing high confirming uptrend and is about to close the gap which started the entire bear markets. So, a further acceptance above that gap level will be good for buyers.
- Bank-nifty has shown more strength than nifty on Monday and it is almost near the swing high. So , carefully watch out for Bank-nifty also, the expectation is that of a breakout in bank-nifty also and if that happens, it will be good for nifty.
- I do not see any clues which might suggest Selling and I can be very wrong. but until I have any clue about sellers entering, i will not take a short trade and that will be very risky.
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.