Bounce back in Nifty following de-escalation of war

On 24th March, Nifty displayed a surprised bounce by opening higher by 365 points at 22878. This became possible due an announcement by the US president to pause the war for 5 days in order to initiate peace talks. Markets globally took this in a very positive way, stocks rallied and oil price came down sharply. Despite this, Nifty was volatile during the day and at some point went down to 22625 and also touched a high of 23057 before closing by 400 points higher for the day at 22912.

Our hypothetical short position using the Futures Only strategy suffered due to this sudden up move. At opening, the SL was supposed to be placed around 23104, however, towards the close of the day, we found SL should be moved to neat 23190. The MHAF candle chart formed an inside bar indicating break in the downside momentum but no immediate Long entry unless this rally continues in the next day.

Our spreadsheet has indicated that if tomorrow the market opens at the same level, the SL for our short position should be trailed to 23017. If we can actually get out at this spot Nifty level then a decent profit will be booked because we shorted at 23250. We have no position in the real money F&O strategy.

Cheers and happy trading.