Nifty 50 Trading Strategy for 14th January
Nifty 50 had a very bad day with a 345 points down close. Prices opened more than 200 points down. The reason for this is not clear but falling Rupee might be an issue. The price action was not clear in the first half but when the prices took a U turn and created a new low the bearishness was confirmed. This scenario was not discussed in my trading plan but there are some scenarios where we need to seize the opportunity. The first move to the upside was for generating the liquidity for the fall to follow. The prices were also below the level of 23268, that was an additional confirmation. The rejection at the top being extremely closed with the previous session low indicates that the prices have rejected even the low of the last day and then made a new day low.
If we see the prices on a daily timeframe, we can see that prices are in a reversal zone. This zone was identified as the prices took a good liquidity last time and then moved up. This is going to be an important zone for reversals to happen. Although today was a very bearish day I will be very careful in making an aggressive short position.
Nifty 50 trading strategy for 14th January
Short Setups
Scenario 1: The levels to the downside are not clear. The only levels clear right now are levels drawn before today and the levels created today. So the high, low and close of 13th January are going to be important. The first setup will be when prices open flat or slightly gap down and makes the first move to the upside and after collecting liquidity will fall below the day low. The targets are not clear, hence keep trailing the profit.
Scenario 2: Prices open gap up and makes the first move up and collect liquidity above 23268 level or the day high. After that the prices falls below the last buying swing and then is rejected to the downside. The targets are not clear. Profit can be trailed and the previous session low can be seen as a good target.
Long setups
Scenario 1: Long setups in such a bearish market is very unlikely. However, we can imagine few setups that can happen. First setup will be when the prices open slightly gap up and falls below previous session low and then immediately bounce back above the last selling swing. The prices should take support om 9 EMA and then move upwards. The target can be 23250.
Scenario 2: This setup is for short covering situation. We know that everyone is conceiving the prices to be very bearish and the big money must have sold at higher prices. The most probable way we can get a good long intraday trade will be when these short sellers try to cover their positions and book profits. Gap up opening and then sustaining above 23500 might result in short squeeze. Be aware of such scenarios as this is totally possible as the reversal zone is just below today's close.
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