In a contrarian view on Nifty50, The benchmark index may trend higher to the levels of 9500-9600 levels or even 10000 if it manages to hold above the level of 8800 on a closing basis. The index has crucial resistance at 9270 levels and takes off this level in a convincing style may open for more upside in the coming time. The index found multiple support at the level of 8800 which act as a downside trigger in the coming time.
“Trading is more about managing and mitigating risk not just taking the risk”.
Some reasons to support the above statements are:-
1 The first reason for going to this trade is the favourable Risk to Reward ratio of 1:3 on minimum and 1:5 on the higher side.
2 The opening of the economy may have a positive optimism to support the price action to move head higher in the short run.
3 Even after the announcement of negative growth rate by RBI in a second emergency move, the price is still holding support at 8800.
The Banking index who has relatively corrected more than the nifty index is trading with the weakness. In the previous trading session, the index opens gap positive and holds some gains to close in the green despite Nifty50 index close in the red with the nominal losses. Technically, the banking index seems to place bottom at the level of 17000 and may due for a bounce back.
The violation of the resistance line of a bullish wedge pattern may take bank nifty to the level of 18200-18600 in the nearest term.
The Global Markets are showing positive optimism on the reopening of the economies. The Dow futureopens on a strong positive note on Tuesday and in addition to this, It has a breakout from the inverted Head and Shoulder pattern. It is a bullish continuation pattern signals of continue uptrend and it may rally another 4-6% from the current levels.