Nifty 50 Trading Strategy for 23rd January
Nifty went up by 130 points on 22nd January. After the 300+ point fall on 21st January, the sentiment was negative. But in yesterday's post, I had mentioned that the 300 point fall was result of last hour panic selling and the market might not be as bearish as we perceive. Market opened gap up and was sideways for few candles and then there was a very slow approach to the previous session low. This confirmed my bias that the market is not very bearish. Had there been a bearish outlook, previous session low would have been broken very easily and very early in the morning. However, there was no proper entry for me today. My trading plan was to be bullish above 23390 and below that I was assuming Nifty to be sideways.
We can see that how prices approached the previous day low and there was a quick bounce from there. The prices in fact crossed the day high and closed near the top. Today has been the test for bulls to show strength and they have shown some resilience. Now tomorrow will be very important in terms of the short term momentum. If the market goes to range high tomorrow then the index is bullish and if the market trends below the low of 22nd January then the expectation is for prices to go further down.
The reversal zone is still there and the prices are respecting it. The point of drawing this zone was to warn for aggressive shorts to be more conservative and wait for the right opportunity. The bounce can come any day now and be ready to book your profits. The best way will be to use some indicator to get out of short positions if they have one.
Nifty 50 trading strategy for 23rd January
As mentioned earlier, the prices are in a very critical zone and tomorrow will be very important. The bullish zone will be above 23390 and bearish zone is below previous session low.
Long setup: The bullish setup will be when prices open slightly gap up and falls near last session close and gets rejected upwards to 23390 by making a day high. If the prices rally to 23390 and gives a good pullback and then a good breakout, I will be comfortable for a long trade till 23528. Do not try to enter a ongoing rally without any pullback.
Short setup: The short setup is easy. If the market opens gap down or flat and test the last close and quickly goes down to the day low and previous session day low, we can expect the prices to be bearish. The target can be 22770.
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