Nifty: Bollinger Bands® at its best! Where will it stop?

Nifty has continued to trade in a big range that we saw earlier from November 2018 – February 2019. Prices reversed back from the upper end of this range and is now moving sharply lower.

During such range bound movement it is best to apply Bollinger bands. See the below chart of Nifty shown in our daily research report – The Financial waves short term update

Nifty daily chart: (shown in morning before market opens)

Following was mentioned in the morning on 17^th September before the markets opened:

On 16^th Sept – Nifty had a Gap down opening near 10995 levels post the global event over the weekend and prices traded in a narrow range throughout the day. The low was made at 10968 and high was at 11052 levels. Overall breadth still continued to stay positive with 1370 advances against 1147 declines…

Nifty is stuck in a range and positional trades on index during such times can be tricky. Prices closed the previous week at the highs but only to give away the gains on first day of the week. 

During such times Bollinger bands continue to provide important support and resistance and the resistance can be seen near 11160 levels on upside and the support is at 10760 levels. So unless we start seeing bands expansion and decisive close above or below these bands one can adopt the strategy of buying near support and selling near resistance.

In short, Nifty is stuck in a range with Crude up by more than 10% and INR depreciated against USD by nearly a percent. These events results into short term volatile movement and pressure on already struggling economy but what will be important is market movement….

The above research highlights how one has to use indicators based on the market movement and how to ride the trend.

For intraday trade setup we combine short term signals using Ichimoku Cloud and generated a short call near 10960 levels. It worked out brilliantly well and Nifty, Bank Nifty collapsed after that achieving target 2 on downside. Get access to Intraday calls  click here.

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