Price action since the beginning of June is not at all sane in Nifty 50. Hocus pocus indicators might give some random signals but a prudent price action trader will always rely on what price says. In this case price tells us to watch RBI minutes and stay out of the zone until market structure becomes clear. Ok a chart speaks thousand words (At least for traders). Let me bring it up to illuminate some light.
There are few things we can observe in this Nifty 50 chart.
First of all there is no volatility at all – A market without volatility is good but without any volatility is not at all good. It usually means there is less liquidity behind price movements. Second, Trend is not there, Nifty is hovering in range between 8150 -8210. Lastly Traders who are positioning within this low liquid structure are indeed weak hand players.
Few more price action observations in Nifty 50…
1. On 3rd June, Price action broke out of resistance level at 8210. Before you call this bullish breakout, take some facts into consideration. Indeed it’s technically a breakout but it is driven by less liquidity. On the other hand breakouts in any market before news event are statistically not a good bet.
2. To get more clarity and structure of market, we need to see how price action responds to RBI minutes. (There can be more or less little surprises in the minutes) Investors will most likely focus on Raghuram Rajan’s term related questions. Policy decision itself won’t be in spotlight unless and until it contain some surprises. Stay monitored !
Happy Price action Trading …
