What are the tools I use on chart when it comes to indices
One important indicator I use is the vwap indicator.
Most of us know how the moving averages work, it basically takes into consideration the average of all the prices of that particular stock that has been traded.
The vwap or volume-weighted average price indicator, not just have a look at the prices, but also looks into the number of qty of shares that has been traded.
It tells us what was the average price at which max number of positions has been bought or sold,
Hence in an upward trending day, we can consider the vwap to act as a dynamic support from where fresh buyers may come in and in a downside trending day, the vwap will act as a dynamic resistance on the other hand.
I personally find vwap to be very reliable on the bank nifty futures. Both as dynamic support and resistance levels, price piercing through vwap signifies some heavy volume coming into the market changing the present outlook when either it crosses from bottom to top or for top to bottom.
In bank nifty I find it reliable in the 3 min time frame for some quick intraday trades.
VWAP is also a price point where people who have taken positions earlier average out or people who are planning to take fresh positions to enter if their outlook is still the same.
The Bank nifty strategy that we personally use has VWAP as an underlying for options trading.
You may have a look at how vwap is holding good with index futures especially Banknifty and Nifty