The stock of SBI Life Insurance Company Limited (SBILIFE) saw some exciting price movements today. With the share price closing at ₹1,725.1, up 1.1% from the previous day’s close, short-term traders may wonder if there are profitable trading opportunities here. Based on today’s price action, let’s explore short-term trading approaches that could work for SBILIFE stock.
Read on to learn about day trading, swing trading, and scalping strategies that traders could deploy to capitalize on SBILIFE’s stock price volatility.
SBILIFE Share Price Action Today
The intraday chart shows that SBILIFE shares opened a gap at ₹1,720 versus the previous close of ₹1,706.3. The stock market today made an intraday high of ₹1,733.4 and a low of ₹1,708 before closing at ₹1,725.1. The day’s price range indicates significant intraday volatility, which opens up short-term trading opportunities.
The share has given a stellar one-year return of 27.85%. With solid fundamentals backing its price run, SBILIFE stock remains in a steady uptrend, as seen from the multi-year weekly chart.
However, the stock is taking a hiatus soon after the recent upmove. Some mild profit booking and consolidation could happen at current levels before the next leg up.
This is where active short-term traders could profit by trading the range. Let’s see how.
Day Trading Strategy
Aggressive traders could look to buy SBILIFE share price on intraday dips around ₹1,710-1,715 levels. A stop loss can be placed below ₹1,700 on a closing basis. The target can be set in the ₹1,725-1,730 zone.
So the plan is to go far near the day’s low, expecting intraday bulls to push the price back into the day’s range by close. A reward to risk 1:1 can be maintained, implying potential profits of ₹10-20 per share on this range trade setup.
Key things to track for the success of this day trade strategy would be hourly RSI staying above the 50 mark and volumes on up moves being higher than down moves.
Swing Trading Strategy
For a 2-5-day timeframe, traders could look to play the likely consolidation in the range of ₹1,700-1,725 levels. The plan would be to sell near the range top around ₹1,725 with a tight stop above ₹1,735 on a closing basis.
The target for swing shorts can be placed near the ₹1,700 support zone. Some minor extensions below ₹1,700 can be expected, enhancing the reward potential on the trades.
The stop above the recent high ensures traders exit swing shorts on any breakout above consolidation. Again, risk: reward can be a minimum of 1:1 here, so about ₹20-25 of profits can be aimed at short trades using swing tactics.
Scalping Strategy
For high-risk appetitive traders, scalping techniques can be used to take advantage of the likely choppy price action in SBILIFE stock. The intraday price chart shows volatile swings even within hourly bars, perfect for very short-term scalpers.
One simple scalp trade strategy would be to sell below the low of the last green hourly candle and buy above the high of the last red hourly candle. For example, when a red hourly candle formed around midday, traders should’ve sold below ₹1,720 with a 2-3 point stop and covered shorts above ₹1,718 when the next green candle formed.
The reward per scalp trade could be small, around ₹5-10. But multiple such trades throughout the day can collectively add up nicely. Strict stop loss and avoiding overtrading are crucial to making this work.
Using Options for Defined Risk
For traders who do not want to short-sell in the cash segment, stock options provide a great alternative to defining their risk exposure.
One lot of SBILIFE comprises 750 shares. Instead of short-selling 750 shares in cash, one can buy an ATM put option. For example, buying the ₹1,720 put option gives unlimited profit potential below ₹1,720, with maximum risk being the premium paid.
This way, traders can efficiently trade for short-term profits in SBILIFE using options without going short. Options also provide margin benefits over stocks. That, again, makes it easier to trade SBILIFE using options.
Short-Term Trading Strategies
Day traders and short-term market participants trade stocks like SBILIFE using various technical analysis and price action reading strategies. Here are some approaches worth considering.
Breakout Trading
With SBILIFE shares appearing to consolidate after a strong uptrend, breakout traders will watch for an upside break of resistance around ₹1,730 or a downside breakdown below support at ₹1,710.
A strong move above ₹1,730, backed by heavy volumes, could trigger buy orders and start the next leg higher. Initial upside targets could be the 52-week high at ₹1,791 and the psychological ₹1,800 level.
Conversely, a breakdown below ₹1,710 could lead to a retest of the 20-day moving average near ₹1,690.
Range Trading
Range traders aim to buy low and sell high within an established price channel. Over the past two weeks, SBILIFE shares have found support near ₹1,700 multiple times.
Intraday range traders could look to buy on dips toward ₹1,710 and book profits on bounces back up to around ₹1,725. A stop loss below ₹1,705 would help limit downside risk if the range low breaks.
Pullback Trading
Another short-term strategy involves anticipating brief retracements within a broader uptrend. SBILIFE shares surged over the past month, so some giving back of gains is entirely normal.
Savvy pullback traders patiently waited for today’s dip back near ₹1,710 before jumping in to ride the bounce. The surge back above ₹1,725 in afternoon trade offered a tidy potential profit.
Momentum Trading
Unlike counter-trend strategies, momentum traders aim to benefit from accelerating price moves. Now that SBILIFE shares are reaching new 52-week highs, momentum traders will look to buy any intraday dips.
If the stock continues trending higher in the coming days, momentum traders will hold their long positions. However, a confirmed breakdown below ₹1,700 would trigger selling to lock in profits. Stops can trail the rising price action to lock in gains.
Conclusion
The SBILIFE stock showed a lot of movement today, making it a good opportunity for short-term traders. Set strict limits on losses, avoid trading too frequently, and be cautious with options. The stock will likely continue being volatile, offering opportunities for short-term trades. Keep an eye on the price and wait for it to drop before trading.
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