Nifty Analysis & Trading Strategy for September 20, 2023

As we expected, the Nifty is entering into the counter-trend consolidation. On Monday, the Nifty traded in just 80 points range and it formed a NR7 bar, which means the day’s range was lowest in the last seven trading sessions. After opening lower the index closed near the lowest point of the day and at the previous day’s low. The Lower Bollinger band flattened and rising is the first indication of contraction. The last two days’ range of 20115-222 is crucial to watch out for now. On a close below the level of 20115, it will lead to a sharp move towards the prior breakout level of 19991. The 8EMA is also placed at a similar level at 19993. The MACD histogram shows a decline in the bullish momentum. The RSI is retreating from an extreme overbought zone. The MACD and RSI show a clear negative divergence on an hourly chart. The RSI already got confirmation of its implications. If the decline is below 19993, it may retrace 19840. On the upside, it must close above the level of 20222 decisively to continue the ongoing uptrend. Avoid taking long positions for now, and book the profits on the table.

The parliamentary special session has kicked off with up to eight bills scheduled for deliberation and potential approval. There is significant speculation surrounding the possibility of the government unveiling unexpected legislative proposals during this session. The market may turn volatile. Stay cautious.

Strategy for the day:

The Nifty formed a lower high candle on the hourly chart and closed at the crucial support level. A move only above the level of 20,155 is positive, and it can test the level of 20,222. Maintain a stop loss at 20110. Above 20222, continue with a trialling stop loss. A move below the level of 20,110 is negative, and it can test the level of 20,040. Maintain a stop loss at 20155. Below the level of 20,040, continue with a trailing stop loss.

 Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.