Pre-Market Analysis: Nifty Future – 23nd Sept 2020

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Observation from previous day:

On Tuesday, Nifty opened inside previous day’s range but quickly broke PDL (previous day’s low) to move down sharply. This move down gave us two clues – first is that sellers intention is to take Nifty down even after a big down move on Monday which clearly shows they are in control. Second, is that 11200 was an important support and buyers were not able to defend this. After the Initial down move, prices remained inside IB range forming a Normal day but buyers were not able to take prices back into previous day’s range. there was again a sideways move, so POC becomes an important level for today and I will be bearish if prices are accepted below POC (point of control – 11175 levels). On upside, PDH (previous day’s high at 11290) becomes important resistance md a break below PDL (previous day’s low at 11100) can give room for further downside. One important this is that , we are approaching monthly expiry (which is tomorrow), so price can also move sideways on account of this expiry as option writer will try to control the markets , so we need to be careful with our trades.

What can be expected now:

I have a sideways to bearish view in Nifty today till it trades below PDH (previous day’s high at 11290 level). ON Daily charts, we are at important support level again but prices might move further down if prices are accepted below PDL (previous day’s low of 11100). Below PDL, 11000 is an important psychological support which option writers will also try to defend. I do not expect an immediate reversal with buyers to get in control but a small inventory adjustment rally cannot be ruled out.

Trade plan for today:

Nifty is expected to open within previous day’s range and I do not have any clarity on open auction trades. Only if prices are accepted below PDL decisively, I will be looking for a short trade otherwise I will just watch nifty for sometime (at least till IB completion – first 1 hour) and then take a decision. There is a possibility of complete sideways move on account of monthly expiry tomorrow and if Nifty gets in control of option sellers, this sideways move will not be good for futures day traders like me. So, best thing to do in that case is to avoid trading of go with minimum position size and minimum risk.

Some cautions:

  1. Nifty is at an important support level, so some buying can be seen but if we break this support level easily, we can see down move continuing.
  2. Nifty have a very good chances of moving sideways for next two days on account of expiry and then , we might start moving down again.

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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