Pre-Market Analysis: Nifty Future – 20th Oct 2020

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Observation from previous day:

On Monday, Nifty opened above PDH (previous day’s high) with a gap and sellers were unable to fill that gap. Also, though buyers managed to sustain the gap and push the prices up, the trade facilitation on upside was poor by buyers and Nifty consolidated inside IB range forming another non-trend day but with a value area higher than previous day. Sellers are clearly absent from last two days and the big down move on Thursday last week has been retraced for last two days with prices now near virgin POC (POC of Thursday). We need to see if sellers defend this POC level today or if buyers manage to close above this level of 11905 and only in later case, it will be safe to assume that sellers are no longer interested to take Nifty down, and we might make another swing high in Nifty in coming days.

What can be expected now:

I am expected Nifty to open inside previous day’s range but near PDH and we can see if prices get accepted above PDH (previous day’s high) or get rejected above PDH. I do not have much clarity on nifty , so I will prefer to stay out another day and watch the price action for further understanding. We need to see if Sellers are above to defend this 11905-11940 zone from where the selling started for the last down move or not.

Trade plan for today:

I do not have any clarity on nifty and I will prefer to stay out and watch price development today. There can be a responsive short trade if Nifty gets rejected above PDH but we need to ignore any short trades if Nifty accepts above PDH (previous day’s high).

Some cautions:

  1. Nifty is not very clear on direction, so better to wait and watch. Banknifty has broken above the consolidation zone on daily timeframe, so If Banknifty moves up today, it can pull Nifty also up.
  2. Similarly, weakness in Nifty can pull Banknifty down and the breakout can turn into False Breakout in Banknifty. So, we need to watch Banknifty also along with Nifty and we might get Hints from Banknifty.
  3. I will not be taking any trades today in 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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