Bank nifty Gap down opening – How to trade bank nifty when it opens gap down

Bank Nifty gap down opening- When you hold your bank nifty position for night, and in US Market suddenly any big news come like CPI data outcome,  that is not good then definitely US Stock Market will fall, and next day definitely our Stock Market will react on it. So Our Stock Market will open Gap Down, in this post I will discuss about how to trade bank nifty when it open gap down.

Trading Bank nifty with a Gap down Opening

Due to any bad news when bank nifty open a gap down the first the you should check is the main trend of the bank nifty either on Daily chart or weekly chart.

When bank nifty opens more than 300 points gap down

IF the main trend is in up direction and if bank nifty opens more than 300 hundred points gap down, and if find its opening near any strong support zone, then your view should be positive. It means at that support level as soon as bank nifty opens and you check a green candle you should buy bank nifty immediately and your stop loss should be below that support level.

After gap down why bank nifty would go up

As the bank nifty opens gap down, the probability to go up is because yesterday those traders who have shorted the bank nifty , in the morning they will definitely try to book the profit, this is the first reason.

Second if bank nifty open near any strong support zone and respect the support level then definitely some buyer will buy at this level, so the combination of both will shoot-up the market in up direction. So in early trade with in few minutes you can get a good move with a good risk reward ratio.

What could be possible target for bank nifty

After a gap down first bank nifty will try to fill its gap, because overall market trend is positive, so its possible that bank nifty could go to previous closing level, at that level, bank nifty could goes to sideways to try to hold that level. Because after a big move bank nifty spent some time to take next move.

If Bank nifty is in down trend and open gapdown

If the bank nifty trend is negative on daily or weekly chart, and if it open gapdown with 100 to 200 points then the possibility is it would try to go in down direction, if there you find any support then you should wait at least first 5 min candle and if bank nifty breaks that level and continue trade below the first 5 min candle then you can make a short position in bank nifty. If the bank nifty was not strong then it will not fill the gap and will continue to go in downward direction, in middle you could see some bounce but overall trend will be in down trend.

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