Analysis and Trade Plan - 18 February 2019

Weekly charts for Nifty and Bank Nifty are very interesting right now. Have a look.

We have formed a double bottom on both. Head and Shoulder formation is also underway. Although Index doesn't stay into such a long bear session on weekly charts, but it is best to be cautious. It can also be start for the formation of LH pattern which suggests downtrend. If 10600 is breached on Nifty, we may look at a bearish sentiment for some days. 10850 and 11000 are required to be broken for trend to change for now. For Bank Nifty, trend to downside may already have started. Unless there is some very good news, we may drift downward with some occasional bounce. One thing to be kept in mind is latest terror attacks. At one side, it has created a war sentiment which is bad for markets; on the other side, since it is election year, Modi Government is bound to take action else it can face citizen's anger. So we can assume, that volatility is going to resume in coming days.

  • There is a possibility of a technical bounce tomorrow on Nifty and Bank Nifty after a straightaway rally.

  • Tuesday is holiday which gives us only two days to take a trade.

  • Technical and Derivative Data is all bearish at the moment. But market makers can trap on either side right now.

  • I will like to wait and watch till second half to take a trade. Bottoms and Top are where most of the wrong trades are caught.

  • I would like to create some condors due to volatility. When market will go up, I might create a bear call spread and when it drifts down, I will take some bull put spread.

  • Expecting volatility, I will take counter hedged trades. Also, trading plan can change depending on conditions.

Note - Will update news factor in the morning.

Rohit Katwal

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