Abbreviations I use 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 Thursday, Banknifty opened inside previous day’s range and sellers moved the prices down to test PDL but were not able to give a follow through on downside forming a NVD down day with most of the price action happening inside previous day’s range. This sideways move can be on account of weekly expiry and it also demonstrates buyers exhaustion. So, we can expect an inventory adjustment break on downside or a sideway consolidation before prices resuming the uptrend.
What can be expected now:
After a big run up. I am expecting Banknifty to move down for a breather. On daily charts, we are still in uptrend and a retracement or sideways consolidation is always good for the uptrend. But having said that, anything can happen, so I will look for short trades only if prices are accepted below PDL and will ignore any trades if prices are accepted inside range. Below PDL, we can test levels of 27595.
Trade plan for today:
I will be looking for shot trade only below PDL after a clear acceptance of prices below PDL. No long trades in banknifty for today.
- No short trades if prices are accepted inside previous day’s range and no long trades if prices are accepted below PDL.
- I will probably wait for prices to settle down before taking any aggressive trade in Banknifty.
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