BANKNIFTY : Trading Levels and Plan for 20-Dec-2024
Intro: Review of the Previous Day’s Plan
As mentioned in Yesterday's plan BANKNIFTY has found support from level mentioned in Chart yesterday. The chart movement adhered closely to the plan, with Bank Nifty consolidating within the highlighted zones before attempting an upward breakout. The yellow trend on the chart depicted a sideways consolidation, while green and red trends outlined bullish and bearish moves respectively. Today, we prepare for potential scenarios based on expected market openings.
Plan for Different Opening Scenarios
Gap-Up Opening (200+ points above 51,902):
If Bank Nifty opens above 52,068, the index is likely entering the resistance zone highlighted in orange. Watch for rejection signals around 52,381, the last intraday resistance.
Plan of Action:
Look for bearish reversal candles or patterns near 52,381 to initiate short positions with a target of 52,068 and a stop loss above 52,450.
In case of a sustained breakout above 52,381, consider fresh longs targeting 52,600 or higher. Ensure confirmation with strong volume.
Key Tips: If trading options, focus on slightly OTM puts for shorts. For breakout trades, consider ATM or slightly OTM calls.
Flat Opening (Within 51,800-52,000 range):
A flat opening near 51,902 keeps the market in the opening resistance zone. Price action within this zone (yellow trend) will guide the next move.
Plan of Action:
Observe price behavior for 30 minutes. If the index breaks below 51,800, initiate shorts targeting 51,418 with a stop loss at 52,000.
If the index breaks above 52,068, initiate longs with targets at 52,381 and stop loss below 51,902.
Key Tips: For flat openings, straddle or strangle strategies can help capture significant moves in either direction.
Gap-Down Opening (200+ points below 51,902):
A gap-down below 51,418 enters the green support/consolidation zone. Watch for potential reversals or breakdowns near 51,092 or the Wave B lower band at 50,664.
Plan of Action:
If Bank Nifty reverses from 51,092, initiate long trades with targets at 51,418, maintaining a stop loss at 50,900.
A breakdown below 51,092 confirms bearish momentum. Short positions can target 50,664, with stop loss above 51,200.
Key Tips: For aggressive trades in this scenario, consider deep OTM puts for higher returns.
Risk Management Tips for Options Trading:
Avoid over-leveraging; allocate no more than 2-3% of capital per trade.
Use hourly candle close as confirmation for entries and exits.
Hedge positions using spreads to limit losses.
Exit trades promptly if they don’t perform as expected within the first 30 minutes.
Summary and Conclusion:
Today's trading plan focuses on key levels derived from technical analysis. The yellow trend indicates likely consolidation, the green trend suggests bullish opportunities, and the red trend signals potential bearish moves. Adherence to price action at critical levels will be crucial for maximizing profits and minimizing risks. Always ensure disciplined execution and maintain a balanced approach.
Disclaimer:
I am not a SEBI-registered analyst. This analysis is for educational purposes only. Please consult with your financial advisor before making any investment decisions.
