Banknifty Set up Profile and Trade Plan Week 16Apr -2018

Banknifty marked a major consolidation in terms of the smallest weekly range on the weekly charts.

A quick recap of the previous week shows that the low marked couldn’t even get into the previous week’s value area, indicating that buyers emerged aggressively in dips. This resulted in the value area shifting higher as well significantly.

This indicates that the coming week will continue to be a consolidation zone with an upward bias for the traders.  The Banknifty PCR remains at 1.45 and the max pain at 25100. Support is likely to emerge in any dips to 25000-24940 zones and should see buyers emerging until markets cracks below that levels or breaks 24850.

On the upside resistance will be seen @ 25540-25600 zones and should see pull backs from there. Until the marked range in green and red doesn’t break in the below volume profiles charts we should see markets consolidate and set up base for the next direction.

BankNifty Near Term Scenarios and potential trade setups

Banknifty marked a good late pull back in the last week of the series to test the weekly vwap @ 24500 levels. And managed to close below it @ 24300 zones. From a monthly candle perspective, we still formed a negative candle, where monthly highs tested the Jan lows but failed to go past it.

Now here are the few trade scenarios from here:

1. Markets manage to respect immediate 24250 zones and pull back to cross 24500, it can test 24800 levels where a lot of selling pressure may emerge. Above 24800 markets can go on to test 25200 and 25500 levels.
2. On the downside if markets break below 24100 it can test upto 23800 zones. Real selling pressure may only emerge on the break of that.

What could be interesting is that markets manage to test 24100 or lower and manage to pull back to do a test of 24800 in the coming sessions. Then we can see a direction emerging.

BANKNIFTY FUTURES WEEKLY RECAP- 16 MAR & PLAN AHEAR

Banknifty had a very interesting last week, it started with the buyers pulling it back and ended up towards friday with sellers exerting a downward thrust.
at the end we closed with in a fairly balanced situation from the week perspective. Now until the lows near 24100 are broken we are still with an open chance to extend a pullback on the upside before the downard shift begins.

There are 3 possibilities that emerge for the current week 1. we continue to trade between 25000 and 24300 zones and consolidate further 2. we see a downward shift and 
break below 24100 and 3. we manage to respect the lows and consider it as an intermediate bottom to break on the upside past 25150 to test 25500 levels.

BankNifty Multi Time frame Perspectives. Trading Ideas to plan your setups.

Hell it’s been ages since I posted here, although Have been regular on twitter and facebook, but it’s worth an idea to put down some perspectives on multi timeframes to help plan the trade over the next week and the next month or so.

Lets drill it down from a top down approach and try and establish how the levels converge. We will typically use price action charts, retracements and some levels.

On the long term charts the monthly charts here Banknifty (BNF ) Has formed a clear top with a tweezer top formation that clearly establishes a bearish reversal pattern and is usually followed by 2-3 months of intense selling and pullbacks marked at the lower end of the top. We had a follow up selling month already. Based on this chart pattern until 26000 levels are crossed its going to be a sell on rise for larger time frame traders.  On the downside there is a definite possibility to test 22600 levels.

BankNifty Monthly Charts

 Coming to Daily charts, we seem to have formed a temporary base near 24100-150 levels and until that level holds, its likely for a short to midterm pull back on the charts, whether that can last a few days to a few weeks, it will unfold over the next week or so. On the upside we have 3 primary zones to watch out for 25000 being the first one, then 25450 levels and then above that a tight band of 25650-25850 zones. Which is unlikely to cross for the downside view to hold. How strong will the pullback will be determined by local and global cues. The above scenario becomes null if we break below 24100 zones. In that case its time to look from the longer term perspective.

Banknifty Futures Daily Charts

Coming to immediate short term charts, last week we almost closed at the highest traded zone of around 24300 zones. Long term players are likely to emerge if we manage to move above 22380 levels, below that expect market to remain non conclusive.  Moving above that we can hit the 24650 & 24850 range on the upside, where it would be prudent to book gains and look for a reversal opportunity for swing players. Again this hypothesis holds good if we manage to hold the 24100 zones. If that zone fails below that we should aim for 23600 and 23100 levels.

Banknifty Futures short Term Charts

Note: For more regular updates please follow our twitter(@powertrades) handle or facebook page.

US Elections Dates And Trading Plan for Next Few Sessions

US polls Starts on November 08 and results are expected to come out by November 9^th in the next 24 hours.

The race for the 45^th president of United States has picked up some pace and has become much closer than that anticipated.

The race is between Hillary Clinton (Democrat) and Donald Trump (Republican). US elections are a two party system.  The markets in large favors the Democrat, partly for two reasons. 1. It kind of maintains a status quo with respect to policies of the democrat already pursued by Obama and 2. Mainly because Trump’s views are perceived as nationalist right wing and hence he favors trade and employment protection, which markets and businesses hate in general.

This is an event which is neither in our control or hands to predict or make work, however one might say. The thing is that there are only two possibilities so by random behavior 50% of predictions will be correct.

Lot of traders fail in the business of trading is because they perceive to believe that markets will work their way, while it is way beyond their control. Do we know the outcome- No, Can we trade the Outcome- Probably Yes. But the smart bet will be to trade it with a plan where the risk is capped, or the potential to earn on a move on either side. 

Knowing to manage your risks and protect your capital is more than half the job done.

This is where systematic trading / mechanical trading gives in the discipline to follow a strategy over and over again rather than being speculative.

The race recently picked up some steam because of possibilities of black votes swinging in favor of republicans and the alleged accusations into the email controversy. At the time of writing this, FBI has given Clinton a clean chit.

The Results will mostly by out by November 9^th, 2016 9:30 AM IST

.How are markets expected to react?

Expect a volatile November series for the rest of the month, hence there can be possibilities of short bursts of directional trades. Advice would be to trade a time frame lower in this case to lock in gains. Especially until volatility subsides. This means if you normally trade daily charts, adjust and trade hourly charts.

My own hunch is that that even after that till the Christmas breaks market will remain a volatile traders market.

From a technical point of view until the base of 8450-8500 holds we will expect an upside. In case Clinton wins, which is a still better probability we can see a bit of euphoria for some time

To trade the markets, I advise that traders use our ProQuants Hedged strategies and manage the risks while ensuring good returns too.

The Big Question- Where is NIFTY headed

NIFTY has been subject to a lot of speculation over the last couple of weeks owing to recent volatility and another test to take out the top. NIFTY marked a psychological high just below the famed 9k mark.

Then we have had a decent sharp correction testing the recent uptrend. There are multiple macro factors in play in upcoming time which will also shape up how markets are behaving.

One of the big factors that has gone unnoticed is that the corporate loan market in India is not really picking up and most corporate are on a bond buying spree. What this means is that corporate are not really looking at business expansion and are playing safe (i.e. they see no demand).

                                       Syndicated Loan Data (Source:Bloomberg)

This doesn’t auger well if we are looking for markets making new highs or if we expect India to be growing at over 7% GDP as earnings will soon fall behind. ( The data suggests that from a loan point of view we are at the lows of 2008)

This will of course mean further pressure on the central bank for rate cuts and that can pump up the markets.

Let’s now look at this from a technical perspective. NIFTY futures have been largely trading within this channel since Feb this year. A breakout or a breakdown outside this channel will lead the next round of market moves.

                                                    NIFTY Futures Daily Chart

Now, why did we choose to write this now? Well here is another interesting analysis. We have done a quick analysis where NIFTY futures formed an Inside candle two days in a row (What this means is that the subsequent two days candles are within the range of the first day). The white dots represent the occurrences.  We had 5 such instances in the last 1 year and 2 of them being in September along. Most of this has always been preceded by a big price move. So brace up for that and this can be a good trading opportunity keeping the channels in view.

There are two seemingly important impact events over this week (FED and BOJ ) this can be a catalyst but eventually markets take their own course once the dust settles and many times most of these are factored in barring surprises as well.

BankNifty near term trade analysis

 BankNifty in range of 18900 to 19070. Breakout of this range will move to 19180 and above it 19360, on downside it can slide to 18580 below 18900 which will make Nifty fall below level of 8500.