Here is an account of a case - study of Axis Bank trade. Please refer the 5-minute chart of Axis Bank below. Though price opened Gap Up, the opening candle was a huge bearish candle. This was a tricky situation. To buy at such times the price must break the high of the bearish candle which didn’t happen in the case below.
From the chart above we see that there were two failures which created Lower Highs consecutively. Near the 2nd failure the price hung on to the daily pivot 'p'. Price was also below 200-MA.
In this weakening price situation, price had to drop 5 points in order to fill the Opening Gap of the session. It was feasible scenario. And there was a current weekly pivot ‘P’ coinciding near the previous close. So, I decided for a short trade.
The trade details are as follows. The entry is at 780.9, the stop is placed at 783.8, and the target is at 774.7 as shown by the trade box from the chart above.
This short trade had Risk-Rewards ratio of 1:2.1. The trade earned 6 points.
What about Nifty?
Nifty 50 too opened Gap Up for the day. But as can be seen from the chart above, the broader index stayed sideways for the day.