Pre-Market Analysis: Banknifty Future – 21st Oct 2020

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Observation from previous day:

On Tuesday, Bank nifty opened inside previous day’s range and attempted to break above PDH (previous day’s high) but moved sideways entire day forming a NVD up day (normal variation day) which was mostly inside previous day’s range. The thing to note here is that the entire consolidation was above POC and therefore we have formed a higher value area, so this can also be absorption of supply. But to confirm that it was absorption of supply, we need a break out today and prices should move quickly above PDH and should not come back inside range then. Any more consolidation inside previous day’s range can also be considered as exhaustion of buyers and sellers can take advantage of that and move prices down later.

What can be expected now:

Bank nifty has consolidated above the sideways range after the breakout and this is not good for buyers. So, a follow through on upside is must else this can also turn into Buying exhaustion. We need to watch if buyers are able to take Banknifty above PDH and sustain today.

Trade plan for today:

I have no clarity on open auction, so i will wait for sometime to see if prices are getting accepted or rejected above PDH (previous day’s high). I would be looking for a long trade only in case of acceptance above PDH and short trade only in case of clear rejection if prices trade below PDH, later in the day.

Some cautions:

  1. I am expecting a good move upside in Banknifty if price gets accepted above PDH (previous day’s high), other wise it will be most likely a sideways to down move.
  2. I will not trade against the trend, so no short trades if prices trade above PDH (previous day’s high)

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, Bank-nifty in above statements Indicate Bank-nifty future for current month and not Bank-nifty index

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