On Wednesday, Bank-nifty opened inside previous day’s range and after some consolidation started moving down breaking IB low and forming a NVD day on downside. There was also a sharp recovery in last two hours which was expected as we were 1 day away from monthly expiry and option writers were expected to act and keep bank nifty in range (see previous analysis – Pre-Market Analysis: Banknifty Future – 23rd Sept 2020). Now , today , we need to see if that last hour recovery continues and for that we need a follow through from bulls to the upside breaking PDH and prices accepting above PDH. But, in case it fails to do so, we can hold ground only for today on account of expiry and then again start moving down from tomorrow. Having said this, there is no rule that expiry has to be sideways and option writers can also get caught on wrong foot, So in case prices start accepting below PDL, we can see further downside today itself but I would observing for one time framing happening before I plan a short trade below PDL.
What can be expected now:
Bank nifty is likely to move sideways on account of expiry today and can test both PDH and PDL levels. In case of acceptance below PDL, I will be bearish on bank nifty and in case of acceptance above PDH, I will become slightly bullish but still, I will avoid any long trades in Bank nifty for today.
Trade plan for today:
I do not have any clarity on open auction trades and it is likely to be volatile on account of a gap down opening (as US markets fell yesterday). So, i will wait for prices to settle for first 1 hour (IB range formation) and then plan my trades based on where the prices got accepted. Overall, I will be looking for only short trades in Bank nifty today and avoid going long. Also, in case of big fluctuations which might happen due to expiry, its better to stay out and let the biggies fight until one of them emerges victorious.
- Expiry today, so prices can be volatile.
- We are at important support in Nifty, so watch Nifty also to see if prices take support at 11000 level or break it downside which can give you relevance for Banknifty also.
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.