13 January 2021 (8:13 am IST)
Indian stock markets are in a strong uptrend for many months now. Currently, these markets are in their pre-Budget rally. In between, these markets witness big intraday corrections and then recover the losses to continue their rally.
Nifty also has been showing a specific pattern in this rally. The index will come very close to breaking a resistance level, then stop. Next day, the index will break that resistance with a gap up opening. For example, yesterday Nifty came close to breaking the 14,600 level, but closed below it. Today, SGX Nifty is trading 40-50 points higher, indicating that Nifty will also open higher and open at or slightly above than the 14,600 mark.
Going by the steady climb in Nifty after breaking the 14,000 level, we can expect this index to reach 15,000 mark before the Union Budget on 1st February.
How To Trade Nifty:
- It is always the best trading strategy to wait after the opening bell until Nifty has created a trading set up.
- This waiting period can save you from wrong trades and overtrading.
- A trading set up is created by many candlesticks and shows “double bottom”, “double top”, “higher low” or “lower high” type of formations that indicate which way the trend is going.
- Once day traders can clearly identify a trend, it becomes easy to follow it and open profitable trades instead of just guessing which way the trend will go.
- In the last two sessions, Nifty has traded almost rangebound.
- Today, if Nifty open above the previous high or nearby, day traders should wait for it to clearly indicate that Nifty will continue to trade up.
- If that signal is generated on charts, take long positions, keep a strict stop loss, then let your trade run with the trend as long as the price follow the trendline.
SGX Nifty is indicating a positive opening in Indian stock markets. After that, these markets may continue to trade high or turn rangebound within the previous session’s range.