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, POC: Point of control
Observation from previous day:
On Monday, Nifty opened above previous day’s range but sellers took the prices back inside range. The indicated that Initiative buying was missing in Nifty . Responsive sellers took the prices further down below IB low but they met responsive buyers at around previous day’s VWAP. We are in uptrend on higher timeframe, so we can assume that the responsive buyers are from higher timeframe which were waiting for favourable prices (buying the dip). I choose to ignore these terms like “Buying the dip” as that is not for retailers. When your capital becomes so much that you can buy the dip and them move prices up, then its for you else better to ignore as no one knows where the dip is. Anyway, we saw prices moving back above PDH and finally halting near IB high forming an Normal distribution with value area shifting up.
What can be expected now:
The last down move is a confirmed inventory adjustment break now and we need to see iof that was sufficient for smart money to throw out weak buyers now. In case, it was, prices are expected to move up above PDH without wasting much time. Any further exhaustion by buyers above PDH would mean otherwise and we can see a continued sideways movement which is not good for buyers.
Trade plan for today:
Nifty is expected to open above near PDH and I am planning for a long trade at break of PDH or if there is a OTD up at PDH. I will look for short trades only below PDL otherwise I am going to ignore any short trades for the day. In case prices do not show a decisive break above PDH or in case there is not good long trade opportunity, i will look for another long trade later after IB range formation.
- No short trades above PDH or even above PDL.
- We are still in uptrend on higher timeframe and it is not a good idea to trade against the trend.
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.