Nifty 50 Trading Setup for 26th December
Nifty 50 has closed slightly down today. I would consider this as a flat close. As anticipated by us the level of 23878 will act as a resistance. Anyone taking a sell side position near the resistance would have made some profit as there was one sided move from there on. Today might look trending market for some but for me it is a sideways market.
Why I did not take any trade today even when my analysis was right?
You could have used any trend indicator for entry near the resistance zone and would have been profitable. But for my setup I need breakouts and breakdowns. In the diagram below, we can see that I have drawn some kind of head and shoulder pattern at the top. This was to highlight the last buying move to be a shorter one. However, the up move was without any major retracement. There was no swing formed at the top. There was no reason to believe that the prices will fall. Had there been a good support forming and then a breakdown, I would have taken the position.
Importance of consistency!
The importance of consistency can be see here. If you followed a resistance breakdown strategy, you would have made profits on 20th December and no trades on 23rd and 24th Of December. If you followed a strategy that took a short trade when the prices reach the resistance, the last two days would have been in profit but on 20th it would have made loss. So taken last three days we would be having one net profit if we followed any strategy. So stick to the strategy you are comfortable trading. Don't switch strategy if it is working within the expected probability.
Let's try to see what can be the scenarios for 26th December
Nifty 50 Long trading setups for 26th December.
Scenario #1:Price open flat and go below 23657 (the weekly low) and then test 23878. The move up should be fast and if we see some retracement and the a quick recovery then Nifty might touch 24065.
Scenario #2: Prices open gap down and move lower than 23539 and then recovers above the swing high and then sustain above 9 EMA. The price can move up to 23878 but the momentum can be lost anywhere in between.
Nifty 50 Short trading setups for 26th December.
Scenario #1:The prices open gap up and reach near 23878 and then trade below the swing low and below 9 EMA. The prices can move down till today's close.
Scenario #2: this is the most bearish case where the price open gap down and then keep testing 23539. If there is a good liquidity sweep and close below this level then the prices might go till 23300.
The market is largely sideways and a consolidation phase is in progress. No need to take aggressive trades in this sideways market.
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