NIFTY : Trading Levels and Plan for 08-Oct-2024Intro:
On 7th October 2024, Nifty continued its downward trend but managed to find support near 24,678, leading to a slight recovery. However, the price remains below key resistance levels at 24,895 and 24,971. This setup indicates that Nifty could either continue its sideways correction or attempt a breakout. Traders should be vigilant for a breakout above 25,195 or a potential fall below 24,678 to guide the next directional move.
Trading Plan for 8th October 2024:
Gap Up Opening (100+ points above):
If Nifty opens above 24,971, it will be approaching strong resistance levels. The first key resistance is 25,195, and a sustained move above this level could indicate a reversal in the current downtrend. However, traders should be cautious as rejection from 25,195 may lead to a sharp sell-off.
Targets: 25,195, 25,265
Stop Loss: Below 24,971 on an hourly candle close basis
Risk Management: Wait for a pullback to enter long trades after a gap-up to avoid getting trapped at the top. Use tighter stop losses near resistance zones to protect profits.
Risk Tip: Consider trading in-the-money call options with limited capital exposure. Avoid out-of-the-money options to prevent time decay losses.
Flat Opening (Within 24,678 - 24,895 range):
In the case of a flat opening, the price action between 24,833 and 24,895 will be crucial. A breakout above 24,895 may trigger a move toward 24,971, while failure to break this level could lead to a consolidation or retracement back toward 24,678.
Targets: 24,971, 25,195
Stop Loss: Below 24,678 on an hourly candle close basis
Risk Management: For flat openings, maintain tight risk control as volatility may rise. Avoid aggressive entries until a clear breakout or breakdown occurs.
Risk Tip: Employ option spreads like bull call spreads or sell out-of-the-money options to reduce risk in a flat opening.
Gap Down Opening (100+ points below):
If Nifty opens with a gap down near 24,606 or lower, the key level to watch is 24,421. If the price breaks below this level, it may initiate a correction phase, potentially targeting 24,354 or lower. Any recovery above 24,606 could provide opportunities for quick scalping trades toward 24,678.
Targets: 24,678 on recovery, 24,421, and 24,354 on further downside
Stop Loss: Below 24,606
Risk Management: Avoid trying to catch falling knives in a gap-down scenario. Wait for confirmation before entering any long trades.
Risk Tip: For gap-down scenarios, protective puts or hedged positions can safeguard against sharp declines. Focus on limiting risk exposure.
Risk Management Tips for Options Trading:
- Avoid over-leveraging, especially in volatile market conditions. Stick to predefined risk strategies like spreads and collars.
- Monitor implied volatility (IV) to avoid purchasing expensive options. Enter trades when IV is lower, as premiums are cheaper.
- Maintain a disciplined stop-loss strategy to manage risk effectively.
Summary & Conclusion:
On 8th October, Nifty's movement will largely depend on the opening scenario. A gap-up could face resistance near 25,195, while a flat opening may offer a chance to trade a breakout above 24,895. For gap-down openings, watch for support around 24,606 and 24,421. Proper risk management with options is crucial for navigating the volatility ahead.
Disclaimer: I am not a SEBI-registered analyst. All views shared are for educational purposes only. Traders should conduct their own analysis or consult a financial advisor before making trading decisions.
