Pre-Market Analysis: Bank-nifty Future – 27th Aug 2020

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Observation from previous day:

On Wednesday, Bank-nifty opened inside previous day’s range and broke PDH (previous day’s high) at open itself. Then , it moved sidwways for most part of the day and then broke on upside towards the end forming a NVD (normal variation day) on upside. The entire consolidation on wednesday was above previous day’s range which shows strength in Banknifty. On daily charts also, banknifty seems to have given a breakout. The value are has alos moved up confirming the uptrend in Banknifty.

What can be expected now:

Since, the up-move happened in the later part of the day, we need to see if the consolidation that happened for most of the previous day was an accumulation by smart money on shorter time-frame. We will get this confirmation only when prices gives a follow through above PDH (previous day’s high) at the start and gets accepted above previous day’s range. Any rejection above PDH (previous day’s high)would indicate unfinished business and prices can come back to test the previous day’s consolidation zone or POC (point of control) levels again.

Trade plan for today:

Bank-nifty is expected to open near or above PDH (previous day’s high) and 23575 (virgin POC level) is the first level to watch for. Acceptance above that can give a good move to upside. A rejection above PDH (previous day’s high) can pave way for prices to retest POC (point of control)- 23250 levels, So we need to be very careful about Bank-nifty trades today. I will not look for any trade at open auction but will later decide on the direction after observing whether prices are getting accepted above or below PDH (previous day’s high).

Some cautions:

  1. Today is expiry, so it is in best interest of option writers to keep bank-nifty in range. But a big move towards the end cannot be ruled out which can trap option writers.
  2. Short trades in bank-nifty are risky, so in case of any short trade, we need to watch carefully.

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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