21 October 2020 (8:20 am IST)
Indian stock markets, especially Nifty has been trading in a very, very narrow range.
Yesterday, Nifty went up to touch 11,950 and it looked like the index will easily cross 12,000 mark. But then, it stopped and lost most of its gains to close just below the 11,900 mark.
On weekly charts, Nifty is making a tiny shadow. But it is also making a “higher low” pattern on these charts, which signal its readiness to rally with global stocks if it happens in the coming weeks.
How To Trade Nifty:
- With its narrow range, Nifty is giving fewer opportunity to day traders.
- It is also testing the patience of day traders.
- The bad thing about such a narrow range bound trend is; day traders don’t get bigger profits.
- The best thing about such narrow range bound markets is, when the range is broken, a big trend follows.
- It can be in any direction; up or down but that trend gives ample opportunity to day traders for booking big profits.
- So, wait for that trend in Nifty and cut down your trading in the current sideways trend.
- Until then, use hourly charts for support and resistance and trade between those levels using 5-minute charts.
Indian stock markets are expected to open with a gap up but trade range bound as the major resistance of 12,000 will keep Nifty under pressure.