Observation from previous day:
On Tuesday, Nifty opened inside previous day’s range just below PDH (previous day’s high) with open high. After this open high was taken out by Buyers, Nifty was rejected above PDH (previous day’s high) and after IB (initial balance) completion , Nifty moved sharply down to test the consolidation zone from previous day where some buying was seen. It then moved sideways to form a NVD (normal variation day) down day which was also an inside day. One important thing to note is that Nifty did not even tested PDL (previous day’s low) , so although the control was with sellers all day, they did not had enough conviction to take prices below PDL (previous day’s low) or may be there was a good buying at the previous day’s consolidation zone which the sellers were not able to overcome. On other hand, buyers did not managed to take nifty higher which indicates unfinished business in this new range developed in last two days. If you see the profile developed in the last two days, most of the trading on Tuesday happened at the low volume zone of Monday, So if we combine last two day’s profile, we can treat both of these day’s combined as a Single normal distribution and we can get further direction on the basis of whether prices gets accepted above or below this zone of 11400 to 11520.
What can be expected now:
There is not much clarity until we break this zone on either side. Since, the latest swing is up , the bias will be towards buyers till we accept below PDL (previous day’s low) decisively. What I mean by this is that, there are bigger chances of price moving on upside than downside, but anything can happen and we need to observe markets further. There is also a possibility of sideways move continuing for some more time. Only acceptance above PDH (previous day’s high) can give a good upmove.
Trade plan for today:
Nifty is expected to open inside range and we can take a long trade if it tries to break PDH (previous day’s high) but there is a possibility of Buyers getting exhausted again above previous day’s high like on Tuesday. So, be careful and watch price action carefully. Ideally, the move above PDH (previous day’s high) on upside should be quick and sustainable for an ideal breakout. I am not looking for any short trade at open today or any long trades if prices remain inside previous day’s range. Later, I will observe market development but if Nifty fails to break PDH (previous day’s high), then we can expect another sideways day today.
- Nifty formed inside day where as Bank-nifty was stronger than Nifty. This was kind of expected as Nifty had been always running ahead of bank-nifty.
- Breakout in Bank-nifty will pull Nifty upside and both can start a new uptrend if that happens, but we might see some more sideways action and choppy markets if both do not move up in unison.
- Nifty accepting below PDL (previous day’s low) will not be good for buyers, so no long trades if Nifty trades below PDL.
Please note that this is a personal view for learning , observational and education purpose and is not a trading recommendation. Trading futures carry a risk, so you should consult a financial expert before taking any risk. Also, Nifty in above statements Indicate Nifty future for current month and not Nifty index.