Pre-Market Analysis: Nifty Future –31st Aug 2020

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Observation from previous day:

On Friday, Nifty opened with a small gap up above PDH (previous day’s high) and failed to move up at the start. It tested PDH (previous day’s high) and then moved up breaking IB high with a huge momentum but witnessed some selling after that breakout. This Selling was not good enough to bring prices back to even IB range (Initial balance) and after a rejection , nifty again moved up but unable to take day’s high again, So it formed a NVD up day (Normal variation day) on Friday. Now, as we talked about no shorting above PDH (previous day’s high) and a poor trade facilitation in Nifty by buyers, the trade facilitation on Friday in nifty was also not good. Prices in nifty are struggling but again, it does not make sense to enter any short trade if prices are moving in upward direction which would be evident by the acceptance above previous day’s range.

What can be expected now:

On Friday, prices in nifty were accepted above previous day’s range although there was a poor trade facilitation. I am expecting the same thing today also. If prices stay above PDH (previous day’s high) , we can expected buyers to defend any attempt by sellers to move down. What needs to be seen is , whether the trade facilitation by buyers is good today or again poor like the last two days, even though we are moving up.

Trade plan for today:

I will plan a long trade only at rejection at PDH (previous day’s high) pnly, if prices open above PDH (previous day’s high) and are accepted above PDH ((previous day’s high). If prices open with a gap, i will not jump into long trade just because of poor trade facilitation happening from last two days in nifty. Also, on Friday, all the action was in bank-nifty with over a 1000+ points intraday rally, so if you compare Nifty to bank-nifty, nifty is weaker. So, If prices fails to get accepted above previous days range, I will look for a good shorting opportunity but only below PDH'(previous day’s high), which is also risky as it is against trend. If nothing is clear, it is better to avoid trading today in Nifty , as market is not going anywhere.

Some cautions:

  1. Nifty is weaker than Bank-nifty. It moving up with a poor trade facilitation, so not much clarity.
  2. Bank-nifty was very strong on Friday and if prices are accepted in bank-nifty above PDH (previous day’s high) , it can show a good move up today also which can be a pain for sellers in nifty, So watch BNF (banknifty future) 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, Nifty in above statements Indicate Nifty future for current month and not Nifty index.

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