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 Wednesday, Banknifty opened above previous day’s range with an open low and tagged 30060 levels that we expected. But after IB range formation, it failed to follow through on upside and instead sellers pushed prices back into previous days range. Surprisingly, Buyers did not defended the prices coming back inside range or may be they were very weak in front of sellers and prices moved further down tagging PDL and closing at bottom forming a triple distribution trend day to downside. This tells us an important development prices have not found sellers at higher levels and we now need to just see how strong these sellers are.
What can be expected now:
By looking at selling momentum, we can expect prices to move further down below PDL at start itself or after some time. In case of later, price action at 29680 levels is very critical as it is the previous day’s VWAP and also POC. Acceptance above 29680 levels would mean sellers are weak or may be sellers are from short timeframe and they might have covered up their shorts. But until we trade below 29680 levels, there is no point looking for a long trade.
Trade plan for today:
I will probably not look for any open auction trade as today is expiry and prices can be volatile in the start. But I will be looking for short trades if prices are accepted below 29680 levels. Break of PDL can bring further down move and we can test poor low at 29570 levels. Another short trade can be at rejection from 29680 levels.
- No short trades above 29680 levels and no long trade below this level.
- Today is expiry, so we can expect volatile moves in start or towards the end.
- Be cautious towards long trades. IT does not mean prices cannot go up but we need to understand that not all moves are tradeable. Like yesterday’s down move was not tradeable for me as it was a surprise, so I stayed out of the market and happy to miss the short trade. There will be opportunities forever.
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