NIFTY - Trading Levels and Plan for 20-Dec-2024Intro: Review of the Previous Day’s Plan
After a gap down opening, prices saw first phase of recovery but could not find follow on support and traded in a narrow range. Let’s analyze potential scenarios for today.
Plan for Different Opening Scenarios
Gap-Up Opening (100+ points above 24,014):
A gap-up above 24,014 places Nifty near the resistance zone or even at 24,103. The focus should be on observing price action for either a breakout or a rejection.
Plan of Action:
If Nifty approaches 24,227, monitor for bearish rejection signals (e.g., shooting stars or bearish engulfing patterns) to initiate short positions targeting 24,103 and 24,014. Stop loss can be placed above 24,250.
For a breakout above 24,227, wait for an hourly close and consider long trades targeting 24,300 or higher. Stop loss below 24,200.
Key Tips: For options, consider OTM calls if a breakout occurs. Hedge positions using vertical spreads to cap potential losses.
Flat Opening (Within 23,900-24,000 range):
A flat opening keeps Nifty in the sideways zone (yellow trend). Early market movement will determine directionality.
Plan of Action:
If Nifty sustains above 24,014, initiate longs targeting 24,103 and 24,227. Use a stop loss below 23,950.
If the index slips below 23,900, initiate shorts targeting 23,877 and 23,748 with a stop loss above 24,000.
Key Tips: A flat opening is ideal for option straddle/strangle setups. Close positions if volatility contracts or movement remains indecisive.
Gap-Down Opening (100+ points below 23,877):
A gap-down below 23,877 places Nifty near support or bearish breakdown zones. Focus on price action around 23,748 or 23,604.
Plan of Action:
If Nifty holds above 23,748, initiate long positions with targets at 23,877 and 23,961, keeping a stop loss below 23,700.
A breakdown below 23,748 opens further downside to 23,604. Initiate shorts below this level with targets at 23,500 or lower. Stop loss above 23,800.
Key Tips: In gap-down scenarios, avoid panic trades. For options, consider OTM puts or debit spreads for bearish strategies.
Risk Management Tips for Options Trading:
Never risk more than 2% of your capital on a single trade.
Use a mix of ATM and OTM options for balanced risk/reward setups.
Exit trades promptly if Nifty deviates from the expected plan.
Monitor implied volatility; avoid overpaying for options in low-volatility environments.
Summary and Conclusion:
Today’s plan revolves around key levels: 24,014, 23,877, and 23,748. The yellow trend indicates likely consolidation, the green trend highlights bullish potential, and the red trend shows bearish zones. Patience and disciplined execution are crucial for trading success. Let price action confirm your trades before entering positions.
Disclaimer:
I am not a SEBI-registered analyst. This analysis is for educational purposes only. Please consult your financial advisor before making any trading decisions.
