Pre-Market Analysis: Banknifty Future – 18th Sept 2020

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On Thursday, Bank-nifty opened inside previous day’s range and moved sideways for entire day which is typical for a expiry day. Buyers did extended IB range (Initial Balance) to upside earlier in day due to which day type is NVD (Normal variation day) upside but they were not able to cross previous day’s POC (point of control). On other hand, sellers were not able to even test PDL (previous day’s low) which was also poor low. This shows weak conviction by both buyers and sellers and we formed one more inside day. The entire price action was again in the sideways range (22100-22800) of last few days. So, we still need to move above or below this sideways range to get clarity or we can see this struggle continuing if that does not happen today.

What can be expected now:

There is no clarity in Bank-nifty as prices are now exactly in middle of the range (22100-22800). Until, we break this range on either side decisively, I do not have any view on Bank-nifty. On higher time-frame , it looks like we are consolidating on the lower end after moving down, so it favours sellers and we might see prices moving down, but a consolidation for too long will also indicate weakness of sellers considering it has been many days now. So , sellers need to break downside quickly if this all sideways movement is distribution.

Trade plan for today:

No trade plan in Bank-nifty at open auction as I have no clarity. I will be looking for a short trade in bank-nifty only in case prices break PDL (previous day’s low) decisively. IN case prices move sideways, I will look for a a mean reversion trade at the extremes but these mean reversion trades are risky now a days as both buyers and sellers are not strong and it becomes very easy for any side to push the prices in their direction to take stop losses. So, need to be careful.

Some cautions:

  1. Bank-nifty is moving sideways from last 7 days, so there is a possibility of again a sideways movement today.
  2. A break on downside can bring a good movement in bank-nifty, So it will be worth to take that risk but we need to manage our risk and be watchful of any sellers weakness if prices break down but follow through is missing. .


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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