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NIFTY BANKNIFTY Trading Levels | How to find Support and Resistance Levels in NIFTY BANK NIFTY - YouTube
Channel: Learning Markets With Manish
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Many of our viewers were asking since many days that
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sir, how do you get levels, explain it once
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so that it will be little easy for us in the live market.
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Because doing post market analysis is little easy and
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telling after that is more easy that these levels of resistance we have found.
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But in the live market if you have to determine levels yourself,
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how can you do it, I will try to explain that to you.
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So let's satrt the video.
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First thing is, to understand nifty-bank nifty,
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understanding one important thing is necessary.
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What is nifty-bank nifty? It is a combination of prices.
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It has different stocks of different weightages.
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According to those weightages nifty reaches a particular price,
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it reached a particular index value,
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similarly bank nifty also reaches an index value.
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These people who are reaching values this way, what this basically tells?
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That stock had reached that price first, then nifty was at what level.
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In this almost for 6-7 months same data runs because
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percentages don't change and the top stocks that you have,
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like Reliance, HDFC Bank, ITC, Infosys.
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Their weightages have negligible change.
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So because of that if you pick top 10 stocks, they have 70% weightage.
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Nifty is determined mostly based on their prices.
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Now let's come to the discussion on how we determine levels.
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Now when you see that a particular big movement is coming in nifty,
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but it holds near resistance. What is that resistance?
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That particular stock price not crossing its level is basically resistance.
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How to determine this in a normal scenario, let's see.
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Because for a normal individual tracking of every stock,
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tracking of every data value is little difficult.
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So how will he do it? Now I will try to explain to you with an example.
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Usually it is determined in 2 ways,
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in live market also and in post market analysis also
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we determine by 2 methods. You know my accuracy, it is mostly certain.
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So we had discussed levels for yesterday,
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means levels for expiry that happened on Thursday.
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Down here you have support of 17290 and resistance is of 17421.
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Market kept moving in these 40-50 points only.
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It didn't break support nor did it break resistance.
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This level that we determine, how do we do it?
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First thing is this,
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maximum people do intraday trading. Remember one thing in intraday trading,
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and specially if you do weekly options,
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and if you do monthly options then I'll come to that too.
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If you have taken a time frame, suppose you have taken a 5 minute chart.
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So you will not have data of the same day available,
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because data of the same day is being made.
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What you have to do is,
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take previous 5 days,
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see low and high of previous 5 days.
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So 1, 2, 3, 4, 5.
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The low point of this
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and the high point of this
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on this you will apply Fibonacci study.
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So you will apply Fibonacci number series.
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How will you apply? One second...
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So I started from low of this and applied upto high of this.
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Now you see 2 things will come out from this study.
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We knew low and high of last 5 days.
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After low and high, what are our levels?
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The high level is high, we had made resistance of 17420 near it.
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I will also try to explain where I got this 420 from.
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Below what was the support we made? Below we made support around 17290.
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Now if you see the Fibonacci series, its first retracement level.
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First retracement level is also 0 to 38.2%
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it was seen almost around at the same level. What does this mean?
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According to Fibonacci data also this is the first level of support.
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Plus, if you see this from this level,
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the level we are calculating this from,
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if from this level if you see of the previous day
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then you see that when first level of 38% was broken
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then next level of support was made where? It made support around 17250.
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What was that? It was 50% of the number series level.
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So this is one thing, okay?
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Now where did we start from? We got low and we got high.
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Even if you go to previous day,
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suppose even if you see the day before that,
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then low on that day was this same and high was this same.
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If you see in that, what is your support? First support at 38%,
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Second support at 50%. This means what?
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Number series are doing their job.
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Whenever you do, take high and low of previous 5 days and apply once,
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the support and resistance of those numbers,
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this basically, of all those prices,
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in number series support of last 5 days
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you can see and infact the weightages in nifty-bank nifty,
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that too is calculated by this. How?
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Because the rally that came in nifty,
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Reliance grew, Infy grew, because all these grew it must have come.
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All those prices are factored in this.
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And calculation of those prices also can be seen here.
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This was the first method.
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Second method, after which we are confirmed that
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in which direction movement will happen.
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Like we say that if this level is breached
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then we can get a move of 50-60 points.
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Then if this level is breached in bank nifty,
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then we can get a move of 150-200 points.
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How do we determine this, I will try to explain.
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First let's come to option data.
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If we see option data of nifty, at 17400 there is
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open interest of about 51000-52000 contracts.
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Means this is a good resistance.
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These call writers will take 85 points premium and eat decay of 3 days.
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On Monday when it opens, this premium will become 50 points
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if market opens at same level.
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See at 17300, below it, where people have done writing in the money,
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there 140 points premium was available.
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Now these 27000 contracts will predict what level?
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They will predict level of 17340. Their levels will come later,
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levels of 17480 will come later, 17300 levels will come before.
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This means what? These levels, Fibonacci level also,
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and this range of 17420-17430, when you breach this level,
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then next level that opens is 17480.
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This you can see in options data at 17480. Why? Because at 17400,
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with 85 points premium, open interest is of 52000 contracts.
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When this breaks the cluster of 17420-17430, it can give movement.
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It is a probability, whether it gives or not is a different thing.
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but after breaking this resistance what is the next probability?
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Of directly going around 17480.
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How will these levels come?
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According to options data.
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And Fibonacci extension is upto where? If it breaches this, then 38.2%,
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means 38.2% above from here will go around 17570-17580.
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And in this if you take the 23% level then it will be around 17515-17520.
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But because it is uncharted,
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in uncharted, little resistance will only come from options data.
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That too will not be strong resistance,
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means number series will not work in that.
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Number series will be used in charted region. If charted region is there,
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then number series will work very well in that,
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and if charted region is not there,
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then you can derive a resistance from options data.
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This is the first thing. How do we find support?
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At 17400, there is open interest of 23000-24000 contracts
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with premium of 118 points.
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From 17400 if you go 118 points down, how much is it? 17280-17290.
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At the same level we have derived support.
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So that support level will be determined in this manner.
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And if you see in number series also,
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then in levels of Fibonacci 38% is near this level.
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So number series support is also there, option data support is also there.
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Therefore this support becomes very important. And if this support breaks
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then you get a movement of 40-50 points.
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Why? Because the next level that opens after that is directly 50%.
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If this 5 day range was bigger, like there are big ranges in bank nifty,
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so if that range was bigger,
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then this movement of 150-200 points we say in bank nifty,
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here it is only of 50-60 points. Why? Because this range is small.
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If these 2 supports break then number series support is also broken,
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option data support is also broken. It can give strong movement,
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upto where? Upto 17250 because next number series support is there.
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You can see it reversed from there on the previous day.
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This way we determine support. Now once again let's come to option data.
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When we determine that a move of 50 points can come, how do we determine it?
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Look, in that you will have to understand some psychology.
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At 17300 these call writers did call write at 140 points.
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Now on Monday suppose the market goes to 17400,
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then those who have 140 points, what will be their stop loss? 20%-30%.
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Means 28 points or 42 points, so let's consider average of 40 points.
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If market reaches 17400, premium will reach 180 points,
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so they will have to take their stop loss. When they trigger stop loss,
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what happens due to this is Algos get to learn that
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buying is coming in the market. If buying is coming then due to that
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a follow up movement comes. The same way if you see on put side,
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suppose if support breaks, then they will square off their positions.
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When people at 17400 will square off their positions,
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then what can be seen in options in the market?
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Buying of put is happening in options, because these are sellers,
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they will do buying below. When it looks like buying of put is happening,
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then what comes out? What will Algos get to learn?
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Buying of put is happening. So what will they do?
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They will create more pressure.
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Selling presure, buying pressure whatever it is, they will create.
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And when they create pressure then after that what movement will happen?
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This type of flash movement comes where put writers do unwinding.
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Then Algos got to learn what? Buying of put is happening.
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Because if you square off sell, buying will happen.
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So Algos will feel that more buying of put is happening, means
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market will possibly come down because premiums of put will increase.
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So they create their pressure.
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That's why this type of movement is triggered.
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So this you have to keep in mind. And in this way
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we determine support levels, resistance levels and do trading.
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Now suppose someone has taken positional monthly trade.
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So I will first make this time frame bigger.
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Let's take 1 hour time frame.
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Now if you want monthly time frame, then what do you have to do?
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First you will have to determine that your month starts from which date.
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Suppose we are now on date 10, from here to around date 12-13.
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This low that you can see, from this low we will take a point.
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And the high made now, we'll keep high on that level.
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Now at monthly level what is the resistance? Around 7900.
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That is resistance at monthly level. So that is a very big resistance.
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And at monthly level where is the support? If you see,
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where will first support be created?
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First support is created on monthly charts around 6900.
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So many people say that analysis of EMA(Exponential Moving Average),
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10 day moving average, 20 day moving average.
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The strong support they say, that around 16950 there is strong support,
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they tell on monthly charts in this way that
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these are projections of levels, here next support is created.
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After where only green candles are seen?
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So from below market came up taking zigzag movement, but
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here if you see there are only green candles.
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Which means that here buying has happened in very large volume.
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So this cluster from 16750 to 17000,
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at this level very high buying has happened. This means what?
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This level, in data, should not break because if it breaks,
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then there will be lot of panic in the market because
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many people have bought it.
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So from all these factors people determine support and resistance.
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Monthly have more room to play, weekly have less room to play.
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These strategies you have to remember.
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These things will help you in the live market also.
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