Nifty 50 Power Play: Unleashing Daily Trading Insights

Indicator- To mark support/resistance levels

The image shows the pivot point levels that I use on an hourly timeframe to identify support, resistance, and correction levels. I have adjusted the pivot type to Fibonacci, as shown, for better accuracy.

Strategy and View

We observe the hourly view of Nifty-50, which indicates a bullish movement. Based on the Smart Money Concept (SMC), we will focus on a bullish directional trade. However, to sustain this bullish movement, the market must grab the liquidity (X-HR) available on the downside, known as Inducement. This liquidity grab often pushes the market strongly in the bullish direction after sweeping stop losses and shaking out retail traders. This scenario presents an opportunity to enter a sell-side trade, albeit a risky one given the overall bullish trend. It’s crucial to maintain a strict risk management system, using fewer quantities in the trade compared to those taken in trend direction trades.

The image shows various lines marked by the Pivot Point Standard Indicator. I have labeled the R3 line in red as P1 for easier reference. This level may act as support in the future and could indicate correction in the market.

However, for the market to grab liquidity and continue its upward movement, it cannot fall directly. It needs to induce buyers into believing that the market is still in a bullish run, encouraging them to open new buying positions.

The image shows the Inducement level at 25321.60 at 09:50 am. The market needs to sweep or take this inducement to push downward.

Entry Strategy

At 11:20 am, the market moves upward and sweeps our inducement level. According to SMC, a risky entry can be made when the market sweeps the previous inducement level. Since sell-side liquidity has been taken, this presents an entry opportunity.

Stop Loss: Place your stop loss above the inducement level and ensure not to risk more than 0.5% of your capital on this trade, as it is against the trend.

It is vital to trail your stop loss with further market movements. I’ve shared further insights on how to place trailing stop losses as the market advances.

Target Points

Now, observe the market in a lower time frame (LTF), such as the 1-minute chart, to monitor when our target points are hit.

• T1: This is the previous low, where retail traders who entered the sell side may exit with minor profits. These are traders who are cautious about losing their gains or are scalpers. When the market closes below this level, trail your stop-loss to break even.
• T2: This is a previous trading day's liquidity point, where many traders will book partial profits. I strongly advise booking partials here to lock in profits. Once you book partials, you ensure a profitable trade, regardless of the market's subsequent direction. When the market closes below this level, trail your stop-loss to the previous target point, T1.
• T3: This is the final target point, representing the hourly-based inducement that the market needs to grab to move upward. The only scenario where the market does not touch this level is if a new hourly inducement level is created. Exit all positions when the market reaches this level.

The market hits our target point (T1) and, after a short correction, closes below that point. At this stage, we actively trail our stop loss to break-even. As the market advances and hits our target point (T2), book partials and trail your SL to T1. Eventually, the market returns to our correction line and hits our trailing SL, exiting us from the position. Since we trailed our stop loss effectively, we end up with a decent profit from this trade.

Further View

Consolidation at this level (P1) can act as a cause where buyers and sellers are actively making their positions, which may lead to either a continuation in our anticipated direction or an opposite breakout.

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