Intraday setup |SBILIFE | 26/11/2024

The market opened flat with Nifty not opening above any important resistance or below any significant support. There was no clear bias or direction in the first hour. The focus should have been to look at individual stock price action and then make a judgment. Since there was no significant move in Nifty, there was a greater chance of stocks also not moving much on their own. In such a scenario, where the undercurrent (Index movement) is insignificant, if the market goes sideways, then it is wise to book small profits and leave. In case the stock does not move much in the next 1.5 hours, we can assume that the trend was weak. Good trends will break the highs and lows quickly and make a new high/low.

SBILIFE had a setup for a long trade. The level 1505 was acting as resistance and the same was being tested twice since the morning. The price was strictly following higher lows. The level 1505 is close to the round number 1500 and hence holds additional significance. The problem here was that the closing was weak with a big wick, and volume was low, and the breakout happened 2 hours after the first test by price at around 9:30. The question that comes to mind is why the prices are taking so much time to break out a level if the buyers are bullish. In markets where the bullish trend is strong, the prices will not hesitate to break important resistance. However, we could have entered the trade, and in case a big bullish candle is not formed or bearish candles start forming, we can exit. In that case, we would have been wrong about the trend strength, and exiting would have made sense.

The trade did not move much and was stalling at the same levels for the next couple of hours. Booking small profit and exiting the trade was a prudent approach.