Pre-Market Analysis: Nifty Future – 3rd Nov 2020

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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, Nifty opened inside previous day’s range and sellers tried to take control and bring prices down in the start but after IB range formation, the prices consolidated sideways and later broke above IB high forming a NVD on upside. The entire range was inside previous day’s range, so it was Inside day and we can say the move was sideways in Nifty. Also, Banknifty was surprisingly strong, so that also contributed to the upside in nifty.

What can be expected now:

I have a sideways to bullish view in Nifty if prices are accepted above 11600 levels. But because of US event today, volatility and wild swings can be expected. We need to be careful of our long positions because there can be a big move down to take out stop losses of weak buyers before prices move up today or tomorrow (usually happens in a big event). It can also happen with over night gap and it is not necessary that it has to happen but we need to be cautious of our positions. Above PDH, 11780 (single print selling zone) is a level to watch for. Acceptance above 11780 can take prices further upside.

Trade plan for today:

Nifty is expected to open above previous day’s range and I am looking for a test of PDH and OTD up from PDH at open to take a long position in nifty. I will not take a position if Nifty is accepted inside previous day’s range at open. After the open, I will look for price acceptance or price rejections above PDH to take a directional trade.

Some cautions:

  1. Do not carry over night positions.
  2. I will be trading with reduced position size and there is high uncertainty.

Disclaimer:

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.

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