Nifty Bearish Trade Set Up
TRADE LOGIC as on 06th Jan 2022 12:00 Hrs
https://in.tradingview.com/chart/whUiROtc/
NIFTY1!
Nifty price action has formed a Bearish Cypher Harmonics Pattern on daily time frame as shown in the attached file. If this hold out, then we can expect a correction at-least till the Daily Demand Zone at 17287 / 17151 on Nifty futures chart. However, the daily trend remains upbeat. So in this confusing scenario, where I am bearish on balance, but don't want to risk losing money on the upside, I plan a Put Ratio Front Spread a little intelligently where the upside is protected completely and the down side yields very good profits if market falls slowly.
The risk to this trade is a very steep fall, ironically! So I calculate the max risk on the downside in a bearish trade (I told you, its ironic).
I estimate the risk as follows: If Nifty moves down by 3.5% or essentially breaks the Demand / Support area as mentioned above by Monday, the max MTM risk shown by the simulator is Rs.2500/lot. Accordingly I will monitor the trade and will issue an exit if there is a steep fall and our MTM loss is breached. If the fall is slow and steady, say in a week's time by next Thursday, Nifty is at 17500, we will be decent profit.
This trade has a decent risk reward profile and with complete protection on the upside. Given that the prices have moved up sharply from 16400 to nearly 18000 in a short span of time, and we are seeing first signs of cooling off, I expect the market to either fall or consolidate. We stand to benefit in both the cases.
Happy Trading.
🦉
https://in.tradingview.com/chart/whUiROtc/
NIFTY1!Nifty price action has formed a Bearish Cypher Harmonics Pattern on daily time frame as shown in the attached file. If this hold out, then we can expect a correction at-least till the Daily Demand Zone at 17287 / 17151 on Nifty futures chart. However, the daily trend remains upbeat. So in this confusing scenario, where I am bearish on balance, but don't want to risk losing money on the upside, I plan a Put Ratio Front Spread a little intelligently where the upside is protected completely and the down side yields very good profits if market falls slowly.
The risk to this trade is a very steep fall, ironically! So I calculate the max risk on the downside in a bearish trade (I told you, its ironic).
I estimate the risk as follows: If Nifty moves down by 3.5% or essentially breaks the Demand / Support area as mentioned above by Monday, the max MTM risk shown by the simulator is Rs.2500/lot. Accordingly I will monitor the trade and will issue an exit if there is a steep fall and our MTM loss is breached. If the fall is slow and steady, say in a week's time by next Thursday, Nifty is at 17500, we will be decent profit.
This trade has a decent risk reward profile and with complete protection on the upside. Given that the prices have moved up sharply from 16400 to nearly 18000 in a short span of time, and we are seeing first signs of cooling off, I expect the market to either fall or consolidate. We stand to benefit in both the cases.
Happy Trading.
🦉
Index Options Trader. Nifty. Bank Nifty.
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