Abbreviations used in the post: PDH: Previous day’s high, PDL: Previous day’s low, IB: Initial Balance or First 1 hour range, NVD: Normal variation day (one of the market profile day types), OTD: open test drive
Observation from previous day:
On Friday, Banknifty opened near PDH and buyers tried to take prices above previous day’s range in the start but were rejected. Interestingly sellers were not able to take prices any further down and after absorbing all the supply near PDH, buyers pushed the price on the upside forming a big trend day on upside. The prices also broke above the consolidation zone and we need to see if we get a follow through on the upside today. In case buyers fail to give a upside follow through above PDH, this will not be good for buyers, but considering we have overnight event (US elections), there is uncertainty and anything can happen.
What can be expected now:
Looking at the strong buying momentum from yesterday, i am expecting buyers to push prices further up confirming a breakout. Above PDH, swing high of 25265 is the level to watch out for and acceptance above that can take prices further upside to test the gap we had from 25600 to 25950 levels. Any acceptance inside previous day’s range or rejection above PDH is not good for buyers and Banknifty will be vulnerable for a fall.
Trade plan for today:
Banknifty is expected to open near PDH and there is no clarity at open auction. We need to wait for IB range formation and see where the prices are getting accepted or rejected before taking a directional trade in banknifty. I am expecting Banknifty not to be smooth because of uncertainty around US elections, so I will probably avoid trading Banknifty unless I get a very good opportunity.
- Do not carry over night positions because of event. there are chance we might open with a gap on either side.
- In case Banknifty gives a directional move and Nifty does not, or vice versa, be careful if you have directional positions or better avoid if you don’t have any.
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, Bank-nifty in above statements Indicate Bank-nifty future for current month and not Bank-nifty index