20 October 2020 (8.05 am IST)
Yesterday, Indian stock markets traded in a narrow range. Nifty’s range was so small that it was better to not trade this index and wait for a bigger trading range to appear.
Despite more than 100 points’ gains, Nifty stayed in a small range, which can be seen in hourly charts. Today, world stock markets are trading negative and we can expect Indian stock markets to trade lower, within the last two sessions’ range.
How To Trade Nifty:
- For day traders, it would be good to keep watching Nifty’s daily chart.
- If the index again makes a small, ant- like trading range, then do not trade and save your trading capital for trending days.
- SGX Nifty is down by 36 points, indicating a lower opening in Nifty.
- If Nifty falls below yesterday’s low mark, we can expect more losses in the index and a chance to short sell the index.
- For this, let Nifty open and create a “lower high” pattern, which will confirm the downtrend.
- That would be the ideal time to open short positions. After that, follow the trend line and exit when trend line is broken.
Indian stock markets are in a minor downtrend since Nov 15, when Nifty had a big drop of almost 400 points from day’s high to day’s low mark. That had made a big “engulfing bearish” candlestick and Nifty is still trading in the shadow of that. Yesterday, Nifty faced strong resistance at 11,900. That resistance will stay in place and day traders should watch if Nifty’s resistance levels continue to come down, putting pressure on Nifty and broader Indian stock markets.