Nifty 50 Trading Strategy for 22nd January
Nifty 50 lost 320 points on 21st January. There was crazy volatility in market. The market was bouncing between the support and resistance and there was huge movements up and down. The market opened slightly gap up above the level 23390. The market fell more than 280 points to the range low. However, price was able to bounce back to the day high. When the market bounced to the day high there was a good chance of prices going up. However, in the next 30 minutes prices fell again to the day low, near the range low. The setups was looking good for a short but then the prices again moved back in the range and was trading sideways for next 1 hour or so. Near the end of session, prices fell again and broke the day low and also gave a close below the range low. There was no follow up selling afterwards as the session was almost over.
The market has shown sell-off in the last hour. For me this will not be a bearish close. Yes, this is a weak close but the volatility also needs to be taken into account. The sell-off might have happened in the last hour due to various geopolitical events and thus the uncertainty. I would have been bearish had there been a continuous sell of through out the day. The daily candle looks like a Marubozu candle which does not reflect the overall price action throughout the day. The index seems weak but the markets are very tricky and this can be a liquidity generating move. I cannot overlook the reversal zone just below the prices and hence I will be ready with a bullish trade plan if it occurs. However, looking at the present price action, I perceive the market to be " not bullish" and there needs to be bearish trade plan if there is a good sell off tomorrow. One thing is very clear - markets can give a good trending day anytime now.
Nifty 50 trading strategy
I have kept the trading plan very simple with only one bullish setup and one bearish setup. The huge moves today has generated sufficient liquidity for a move on both side. There is a good chance of prices trending and hence I am planning for only that.
Long Setup: Price opens gap up and moves downwards towards either 23100 level or 23266 level. The prices should recover immediately to the 23390 level and then if it gives a good liquidity grabbing pattern and a closing above 23390, we can take a trade to the upside till 23528. The second target can be 23700 if the trend continues.
Short Setup: Price opens flat or slight gap down and makes a move up near the 23266 level and falls below the day low and below 23100. The target can be 22773. The targets can be big in this setup as there has been good consolidation before the breakdown.
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