NIFTY : Trading levels and Plan for 09-Oct-2024

Nifty Trading Plan for 09-Oct-2024

Previous Day's Chart Pattern Recap
On the previous trading day, Nifty showed a first recovery pattern from recent lows, as depicted by the "No Trade Zone" in the 15-minute chart. There was limited directional movement as traders seemed hesitant to break out of this range. We now stand at a crucial point, where price action near the opening can dictate the upcoming trend. Both support and resistance levels are well-defined, so today's strategy will revolve around managing trades based on gap openings and key price zones.

Opening Scenarios

  1. Gap Up Opening (+100 points or more):
    In case of a gap up opening, Nifty will likely open above the "No Trade Zone" and may test the "Resistance at BoS Zone" near 25,162–25,198 levels. If Nifty sustains above this zone, we can expect an attempt towards the final intraday resistance at 25,265. However, traders should be cautious of a potential reversal near this level. Wait for a proper breakout confirmation or rejection around 25,162–25,198.
    Trade Setup:
    - Buy near 25,165 with a stop loss just below 25,120.
    - First target: 25,240; Second target: 25,265.
    - If price reverses from resistance, consider shorting below 25,120 with a target towards 25,036.

  2. Flat Opening:
    A flat opening within the "No Trade Zone" (25,036–25,085) should be treated with caution. Nifty may show range-bound movement initially. If prices stay within this zone for the first 15–30 minutes, it’s best to wait for a breakout on either side for directional trades.
    Trade Setup:
    - A breakout above 25,085 will target 25,162. Buy if hourly candle sustains above 25,085.
    - If Nifty breaks below 25,036, short with a target towards 24,985–24,950 range.
    - Consider waiting for confirmation as this zone could lead to false breakouts.

  3. Gap Down Opening (-100 points or more):
    In the case of a gap down opening near the "Opening Support" zone around 24,841–24,865, we can expect some buying interest. However, if the gap down is severe and breaks below this level, prices may move towards the "Last Support" at 24,768 or further down to 24,600.
    Trade Setup:
    - Buy near 24,850–24,865 levels if price holds, with a target of 24,985.
    - If Nifty fails to hold 24,841, short with a target of 24,768, and further down to 24,650.
    - If price action remains bearish, wait for more confirmation near these support levels for low-risk entries.


Risk Management Tips for Options Traders:
- Always set a stop loss based on your maximum risk tolerance. Use an hourly close for better confirmation, especially in volatile market conditions.
- For gap openings, avoid taking trades in the first 15 minutes to allow the market to settle.
- Use defined strike prices close to key levels. For example, if Nifty is trading near 25,000, choose 25,000–25,100 CE/PE based on the directional bias.
- Avoid overleveraging and only deploy capital you're comfortable risking in volatile situations.

Summary and Conclusion:
Today's trading will revolve around key price levels, with a focus on gap openings. A gap up may test resistance, a flat opening requires patience for a breakout, and a gap down should be approached cautiously near support. Given the consolidation in the previous session, today's move could provide some clarity for short-term trends. Keep an eye on breakout/rejection patterns near key zones.

Disclaimer:
I am not a SEBI registered analyst. The ideas shared here are for educational purposes. Please do your own analysis or consult a financial advisor before making any trading decisions.
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