Pre-Market Analysis: Banknifty Future – 22nd Oct 2020

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Observation from previous day:

On Wednesday, Bank nifty opened above previous day’s range and quickly moved up with initiative buying but then it started moving sideways which can be inferred as exhaustion by the short timeframe buyers and we saw a fast down move taking prices back inside previous day’s range only to be rejected by responsive buyers. This down move can be inferred as short timeframe inventory adjustment break which would have thrown short term buyers out and we might continue to move upside in Banknifty. But since, today is a weekly expiry, there is a chance of sideways move and we resuming uptrend tomorrow if not today until some overnight news turns the table.

What can be expected now:

The inventory adjustment break is good for buyers and we might see higher prices if we can break above PDH (previous day’s high). But if we come back again and test PDL (previous day’s low), it is not a good sign for buyers and the confusion will continue.

Trade plan for today:

I will be looking for a long trade at break of PDH (previous day’s high) or a if there is OTD up (Open test drive up) at PDH. I am not looking for any short trade at open. In case prices do not break above PDH, I will probably stay out of trade.

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 move.
  2. Today is expiry, so a sideways move cannot be ruled out.
  3. Strictly, no short trade if prices are accepted 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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