NIFTY - Strategy and Levels for 10-Sep-2024On 9th September 2024, Nifty displayed a consolidation pattern with resistance around the 25,064 level and support near 24,699. The market showed some recovery signs as it climbed from the lows around 24,700 levels to test resistance near 24,942.25. This brings us to a critical juncture where the market could break out in either direction, especially depending on the opening on 10th September 2024. With multiple resistance levels overhead and supports underneath, traders should be cautious in planning their trades. Let's discuss a trading plan for different opening scenarios.
Trading Plan for 10th September 2024
Gap Up Opening (100+ points above closing)
If Nifty opens above 25,064 (Opening Resistance) but below 25,201 (Important Resistance for Trend Reversal):
- Wait for a pullback toward the 25,064 zone and check if it holds as support.
- Go long with a target of 25,201 and stop loss just below 25,038.
- If the market rejects the 25,064 resistance and turns bearish, shorting with a target of 24,945 (Opening support for sideways) would be a safer option.
If Nifty opens above 25,201 (Important Resistance for Trend Reversal):
- The momentum would likely shift to a bullish trend. Enter long after confirming the breakout holds.
- The next possible target could be around 25,240–25,280 levels.
- Keep a tight stop loss below 25,064 to manage risk in case of a false breakout.
If Nifty shows immediate weakness after gap up and breaks below 25,064:
- Avoid aggressive long positions and wait for a retest of support levels at 24,945 or 24,849 for a bounce.
Flat Opening
If Nifty opens near 24,945 (Previous close):
- Wait for the market to pick a direction; the first 15–30 minutes could be crucial for setting the trend.
- Go long only if the market sustains above 24,945, with a target of 25,064 and stop loss below 24,896.22.
- For a short trade, if the market dips below 24,896.22, target 24,849 and stop loss above 24,942.25.
If Nifty stays range-bound:
- Be cautious of sideways moves. Focus on scalping trades within the range of 24,945–25,064.
- Look for a breakout above 25,064 or breakdown below 24,849 for a stronger directional move.
If volatility spikes during the day:
- Use pivot levels 24,945 and 25,064 to determine trend continuation or reversal. Adjust your trades accordingly.
Gap Down Opening (100+ points below closing)
If Nifty opens around 24,849 (Support at retracement):
- This could act as strong support, providing a good entry point for long trades if the level holds.
- Go long with a stop loss just below 24,849 and aim for 24,945 as the first target.
- If 24,849 doesn’t hold, short the market with a target of 24,729 and a stop loss above 24,849.
If Nifty opens below 24,849 but above 24,699 (Buyer’s support):
- Wait for market stability before entering long positions.
- Go long with a tight stop loss below 24,699, and target 24,849 first.
If Nifty opens below 24,699 (Buyer’s Support):
- The bearish trend could continue, leading to further downside.
- Short positions are favorable with targets near 24,600–24,620, and stop loss above 24,729.
Risk Management for Options Trading
- Use options with limited risk, like buying calls or puts rather than shorting options to avoid unlimited risk.
- For gap scenarios, wait for the first 15 minutes before entering positions as market trends can reverse quickly.
- Maintain a risk-reward ratio of at least 1:2 on every trade.
- Do not over-leverage; keep position sizes small, especially in volatile markets.
- Consider hedging strategies such as buying protective puts or calls when trading in highly volatile scenarios.
Summary and Conclusion
The Nifty is currently at a pivotal point with clear resistance at 25,064 and critical support at 24,849. The direction of the market on 10th September 2024 will heavily depend on the opening scenario. For gap-up openings, cautious long trades are recommended as long as resistance levels are respected. For flat or gap-down openings, it’s important to observe how support levels hold before making trades. Managing risks, especially with options, will be crucial in a volatile environment.
Disclaimer: I am not a SEBI-registered analyst. All views expressed here are for educational purposes only. Please consult your financial advisor before making any trading decisions.
