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

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Observation from previous day:

On Tuesday, Nifty opened inside previous day’s range and sellers attempted to take prices down but met immediately with buying which took the prices above PDH in the first 30 minutes itself. Prices then moved up till half session and then consolidated near to PDH forming another non-trend day with Value area moving up (although thee was a little IB range extension on upside but it was very small and was a clear exhaustion).

Now, if we look at last three days, there is a poor trade facilitation by buyers but value area is constantly moving up. Also, any attempt , even a small attempt by sellers to bring prices down is being met by buying. So, basically this indicates that higher timeframe are not aggressive here and the price movement is happening due to shorter timeframes. This also means that higher timeframes might be building up their positions but whether on long side or on short side will be clear only when we get follow through in that direction.

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. There is a possibility of a breakout upside if last 3 days were absorption of selling by higher timeframes but we need confirmation with a follow through and until that happens, it is another no trading day for me.

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 prefer not be take 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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