Pre-Market Analysis: Nifty Future – 27th Aug 2020

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Observation from previous day:

On Wednesday, Nifty opened inside previous day’s range near POC (point of control) and formed a small IB (initial balance) near POC (point of control). It moved sideways in that small IB (initial balance) range for most part of the day and broke out above IB high ((initial balance high) and PDH (previous day’s high) to close near day’s high forming a trend day on upside but value area was developed sideways. Though, this looks like a good breakout, the only issue is : Since we left some poor structures behind like poor lows and previous day’s low is also a poor low, we need a must follow through on upside from bulls above PDH (previous day’s high) today. In case that does not happen, prices might go and retest these poor structures but one thing is clear – on higher time-frame, we are in uptrend, so be careful about trading against the trend. There is nothing right or wrong in markets and just be aware that trading against the trend is always more risky. Above PDH (previous day’s high), there is a virgin POC (point of control) at 11570 and next virgin POC (point of control) is at 11710 and in between these levels, there was a huge volatility previously, so it becomes an uncertain area.

What can be expected now:

Acceptance above PDH (previous day’s high) for some time can give way to more upside in nifty and rejection below PDH (previous day’s high) can give way for prices to test POC (point of control) at around 11480 levels. Also , considering today is expiry, a sideways movement for entire day cannot be ruled out and any sideways movement near or above PDH (previous day’s high) will be good for buyers in the coming days.

Trade plan for today:

Nifty is expected to open near PDH (previous day’s high). After yesterday’s good move to upside, we need to see price acceptance above PDH (previous day’s high) and follow through, but i will not trade at open auction, as it can be volatile and i am okay to miss an initiative buying move if it happens. Now, in case prices are accepted above PDH (previous day’s high), I will look for a long trade later and in case prices comes back to range, I will look for a short trade. As per one of my rules, I will not look for any short trade if prices stay above PDH (previous day’s high).

Some cautions:

  1. Today is monthly expiry, So a sideways movement cannot be rules out, but if prices start trending in one direction, do not go against the trend.
  2. Do not look for short trades above PDH (previous day’s high).
  3. Bank-nifty has also given a breakout and keep an eye on bank-nifty to see whether it is supporting or not supporting 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, Nifty in above statements Indicate Nifty future for current month and not Nifty index.

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