Nifty and Bank Nifty Trading Strategy for October 13, 2023

Nifty View:

Thursday’s market activity signaled a potential exhaustion in the prevailing trend. The Nifty traded within the previous day’s range, mirroring a pattern observed for the second consecutive trading session. Notably, it adhered to the opening hour’s range and concluded below the opening level. The index came close to testing the gap area from September but ultimately fell short of filling it. Should the index bridge this gap, it’s poised to achieve the 61.8 percent retracement level at 19,883.

The Bollinger bands are currently exhibiting horizontal movement, implying an inclination toward further consolidation within the range. The daily RSI has dipped below the 55 zone. On a positive note, the MACD has crossed above the zero line. However, the hourly MACD has generated a recent sell signal, indicating a short-term bearish outlook. While negative divergences aren’t evident at the moment, the upward momentum is undeniably waning. Thursday’s modest decline was accompanied by higher trading volume compared to the preceding day, reinforcing the notion of exhaustion in the recent rally. Currently, the index needs to surpass the high recorded on Thursday at 19,843 to sustain the rally. Should it accomplish this, the immediate target lies at 19,883, followed by 19,940.

Conversely, a close below the 20 DMA at 19,761 would signify a negative turn, potentially heralding a resumption of the correction. The immediate support level is situated at the 50 DMA, which is at 19,606. Over the next 2-5 trading sessions, the 19,600-19,600 zone will play a pivotal role in determining the index’s directional bias. It’s advisable to adopt a neutral or sideways stance until the range is decisively broken. If the current pullback rally concludes, a sharper downside move may be anticipated. As mentioned, a clear close below 19,600 would test the previous low. Let us wait and watch the range very closely. 

Nifty – Strategy for the day:

For yet another day, the Nifty traded rangebound and closed near the support. A move above 19810 is positive, and it can test 19865. Maintain a stop loss at 19775. Above 19865, continue with a trailing stop loss. But, a move below 19775 is negative and it can test 19700. Maintain a stop loss at 19810. Below 19700, continue with a trailing stop loss.

Bank Nifty View:

The Bank Nifty has formed an inside bar after trading in just a 163-point tight range. The volumes were at their lowest in recent times. It tested the 50 DMA for the second time and failed to close above it. The index is struggling to move above the 38.2 percent retracement level. As discussed yesterday, The Anchored VWAP, 20 DMA, and 50 DMA are the clusters of resistance now. Only above this cluster, 44795, will be positive. There is no change in the technical structure. On an hourly chart, the MACD is about to give a bearish signal, and the RSI has entered into the neutral zone. The weekly Anchored VWAP support is at 43855, which is also the previous week’s low. This will act as a strong support in the near term. As the index has formed two successive indecisive candles, it is better to stay away from long positions. A decisive close above the cluster of resistance will give a good upside move, and wait for it. Until then, stay with a neutral bias and apply rangebound strategies. 

Bank Nifty – Strategy for the day:

The Bank Nifty traded in a tight range. A move above 44600 is positive, and it can test 44780. Maintain a stop loss at 44470. Above 44780, continue with a trailing stop loss. But, a move below 44470 is negative and can test 44260. Maintain a stop loss at 44580. Below 44260, 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.