Today Nifty Future opened at yesterdays close and the price action was an extension of the yesterdays closing 1 hour price range. The volume based price action that played out on an events day was different compared to the previous days event based price action. Inflation data was expected to be announced between 11:00am to 11:30am.
Nifty Future in the first 30 minutes made a opening range of 5358 to 5376 and then traded in this range till Inflation data was announced. The points noted were
1. Till the inflation data announcement there was low volumes and prior to the announcement Nifty Future made a new low just two points below the prior low.
Conclusion: Market participants were awaiting event to get over with. Better to wait for event announcement and observe price action before adding position.
2. High volume price spike from 5364 to 5406. Usually the news flow would be bad and Bears would attempt to hammer Nifty Future to new lows. But Bulls would defend vigorously this would cause a spike in volatility and stops in both direction would get blown.
Conclusion: A clear bullish trend as when there is good news flow the Bears are getting slaughtered. A price spike does not give decent pullbacks for long trade entry. Any trade entry would have to be at the market. With stop loss below the morning session high.
3. Low volume pullback from the spike high of 5406. Bears have defended the 5380 Nifty Spot price level but are not persistent to move Nifty Future back to the start of the rally
Conclusion: The pullback has little chance of becoming a full fledged down move. But price action could be range bound as the Nifty Spot level of 5380 is a significant price level.
4. Moderate volume attempt to break out to new high fails with Bears restricting themselves to defending the 5380 Nifty Spot level and are not looking to take price lower.
Conclusion: Nifty Future is in strong bullish trend. But the Spike and price channel pattern that is formed dictates that Nifty Future would fall back to the 5376 level before attempting a new high
Summary: Today the big move of the day did not give any meaningful pullback for a long entry. After the spike all trades were scalp trades of not more than 10 points.
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