Nifty 50, the benchmark index of the National Stock Exchange (NSE) of India, is a key indicator of the Indian equity market’s performance. Traders and investors closely monitor its trends and patterns to make informed trading decisions. In this article, we will delve into the analysis of Nifty 50’s monthly trendline support and explore trading strategies based on its daily and weekly timeframes.
Monthly Trendline Support:
The monthly trendline in Nifty 50 has proven to be a significant support level across various timeframes, including daily and weekly. This trendline acts as a guiding force, influencing the market sentiment and direction. Candles consistently making higher highs in the monthly, weekly, and daily timeframes signify a bullish trend, indicating a positive outlook for the index.
Daily Timeframe Analysis:
Recently, Nifty 50 experienced an ‘M’ formation followed by a minor downtrend, which concluded on March 20th with the formation of a Doji candle, signaling a potential reversal. Currently, the main resistance zone in the daily timeframe is identified between 22226.10 to 22322.65. The last trading day witnessed last-minute selling pressure, suggesting a potential negative market sentiment if a gap down occurs. However, a gap-up opening could present buying opportunities.
Weekly Timeframe Concerns:
In the weekly timeframe, despite the price moving upwards, extended tails in candles indicate weak momentum. While Nifty 50 finds support around 20600, the lack of buyer strength until breaking the swing high raises concerns. The index is currently moving within a range of approximately 1000 points, indicating limited potential for strong directional moves until the range is breached.
Confirmation through Indicators:
To confirm the range-bound market, traders analyze two key indicators – Relative Strength Index (RSI) and Average Directional Index (ADX). A preferred RSI range of 40-60 and an ADX value below 25 signify a range-bound market. Currently, Nifty 50’s RSI stands at 52.38 and ADX at 16, confirming the range-bound nature of the market and prompting traders to adjust their trading strategies accordingly.
Intraday Trading Opportunities:
While long-term trades may not be ideal, intraday traders may find opportunities within the range-bound market. By closely monitoring the 15-minute chart, traders can identify strong support and resistance levels, potentially leveraging breakout or breakdown scenarios for profitable trades.
Monthly Expiry Impact:
With the monthly expiry approaching, the likelihood of significant market movements increases. Traders should remain vigilant and capitalize on potential opportunities arising from heightened volatility during the expiry period.
Bank Nifty Analysis:
Similar to Nifty 50, Bank Nifty also displays higher highs in the monthly timeframe, with the monthly trendline acting as support across weekly and daily timeframes. Analysis of Bank Nifty’s price action and key levels provides valuable insights for traders to navigate potential trading opportunities.
In conclusion, Nifty 50’s monthly trendline support remains crucial for traders, influencing market sentiment and direction across various timeframes. By analyzing daily and weekly trends, confirming with indicators, and monitoring intraday opportunities, traders can effectively navigate the current market conditions and capitalize on potential trading opportunities. However, with the monthly expiry approaching, traders should exercise caution and remain adaptable to evolving market dynamics.
Also Read: High-Risk, High-Reward: The Nifty Options Trade Setup Explained
Picture from: Treading View
