The Nifty moved in line with the last week’s expectations. The failure at 5,970 on Friday confirms that the trend is down. Kindly direct your attention to the 15-minute chart of the Nifty featured below. The short-term outlook remains bearish until the index moves past the recent swing high of 6,135.
The stop loss for short positions in the Nifty must be placed above this swing high at 6,135. From a trading perspective, there are a lot of options to consider, depending on the risk profile and the trading time-frame.
- A long position with a stop loss at 5,850 and target of 6,050 is a low-risk and low-probability trade idea.
- Taking short positions on a fall below 5,850, with a stop loss at 5,940 and target of 5,650 is another option.
- A pull back to 6,050 or beyond would present shorting opportunities with a stop loss at 6,150 and target of 5,650.
The third strategy outlined above is our preferred one. Whether the Nifty can pull back to these levels and present a shorting opportunity is the moot question. We however do not have a definitive answer to this question.