NIFTY : Trading Levels and Plan for 03-Oct-2024

Oct 2

Introduction:
On 01-Oct-2024, Nifty experienced a consolidation phase with prices moving within a narrow range after a sharp sell-off in the earlier sessions. Chart shows possible re-entry points for both buyers and sellers, which could guide the opening movements on 03-Oct-2024. Let’s plan for various scenarios: Gap Up, Flat, and Gap Down opening.

Trading Plan for 03-Oct-2024:

1. Gap Up Opening (100+ points):
   If Nifty opens with a gap up above 25,912, it will likely face resistance at the seller's re-entry zone of 26,008. Watch for price action around 26,008–26,161, which could trigger either profit-booking or another rally. If Nifty sustains above 26,161, look for long opportunities targeting 26,250 and 26,350. If rejected at these levels, consider short positions with stops above 26,200 and aim for 25,862.
   
   ➤ Plan for Gap Up: Wait for a pullback towards 25,862–25,759 to enter long positions if supported by price action confirmation. Avoid entering fresh longs at the high if rejected near 26,008.
   
   
2. Flat Opening (0 to 100 points):
   In case of a flat opening, expect Nifty to retest the 25,759–25,862 resistance zone. A breakout above 25,862 with strong volume could lead to a bullish reversal towards 26,008. Failure to hold above 25,759 would indicate further weakness, bringing 25,694 into play as the next support zone.
   
   ➤ Plan for Flat Opening: Look for a long entry near 25,759 with a stop below 25,694. Watch for bullish momentum above 25,862 for a continuation toward 26,008. If rejected, prepare for short positions targeting 25,694 and lower.
   
   
3. Gap Down Opening (100+ points):
   A gap down below 25,694 will likely bring buyers’ support near 25,333 into play. Watch how Nifty reacts around the extended support zone of 25,694–25,759. A break below 25,694 could see sharp selling pressure toward the lower zones of 25,333–25,400. However, if Nifty bounces off 25,694, expect a possible recovery toward 25,759.
   
   ➤ Plan for Gap Down: Enter long positions if Nifty shows reversal signals near 25,694 with stops below 25,650, targeting 25,759. If a further sell-off happens, short trades can be considered with stops above 25,694 and a target of 25,333.
   

Risk Management Tips for Options Trading:

1. Always set predefined stop losses based on hourly candle closes, especially when trading volatile options.
   
2. Avoid buying out-of-the-money (OTM) options during a volatile market unless the trend is clear.
   
3. For intraday options, try to trade with a 1:2 or 1:3 risk/reward ratio to maximize profitability while minimizing losses.
   
4. Exit from options positions near key resistance or support levels if price action indicates a reversal.
   

Summary & Conclusion:
Nifty is trading at a critical juncture. The price action around 25,694 (extended support) and 25,862 (resistance) will guide the next trend direction. A break above 25,862 could bring a bullish rally toward 26,008, while a break below 25,694 may lead to further downside. Monitor the market reaction post-opening and wait for clear setups before entering trades to ensure good risk management.

Disclaimer: I am not a SEBI registered analyst. Please conduct your analysis or consult a financial advisor before making trading decisions.