My readers has got almost 500 points gain in last one month. If you are new to this site just check, way back in January 26th I have given buy call on Nifty at 8600 levels in my post Fresh Breakout? What Is The Next Target Of Nifty? Since then we have only seen single sided move in Nifty and from 8600 Nifty has managed to make a high of 8992.50. Now whats on the cards. Are you still buying for the short term. STOP. You already got windfall gains buying Nifty. Now its time to change your strategy. Next week’s trading strategy will be to short sell Nifty futures. Target?? Read on.
Nifty Technical Scenario:
On 2nd of March Nifty index has made a new high but closed sharply down to make a bearish engulfing candle in daily charts. Last Friday it has broken engulfing candle low triggering a sell signal and shown an weak pullback. Daily upwards trend line has also got broken confirming that bears are in control.
How To Measure The Target For Nifty?
Nifty has started its single sided upmove from 7893 zone and clocked high of 8992.50. Hence we expect the immediate downside target will be at least 25% of the upmove which comes to 8717 (check image below). We also have a support zone at 8736 as seen in our image above. So I kept a conservative downside target of 8740 in Nifty future.
The intermediate top is still not confirmed, so my expectation of fall is still an assumption.
If you short sell Nifty futures, what will be your stop loss?
Nifty index last traded price is 8897.65 (say 8900). We can keep a stop loss above 8970 OR best above 8995 for the target of 8740. So a 95 points stop loss against a 160 points target. The risk reward is favourable.
How much quantity to trade?
You can short sell Nifty futures 2 lots and if if you get the target it will bring you Rs. 160 x 150 quantity = Rs. 24000 profits. Lion hearted traders can short sell more quantities and you will sell 2 lots OR two truckloads will depend on your risk appetite. Please read the disclaimer before you take any trades.
Indrajit is a professional blogger and trading system developer. Amibroker expert, Wordpress expert, SEO expert and stock market analyst.Trading since 2002, he has started the journey of StockManiacs.net on 2008. He follows Indian and world stock markets closely.