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 Thursday, Nifty opened inside previous day’s range and sellers tried to take prices below PDL – two times ,one during first 1 hour and second time after some consolidation near PDL. This was a clear exhaustion of sellers and later Nifty moved up forming a NVD to upside, but overall prices remain in sideways range between 13025 and PDL (same what we expected in previous day pre-analysis for selling failure below PDL). One more important thing to note is that yesterday was monthly expiry, so this late up move might be due to less participation and short term interest. Now, who will control the market today in not very clear but some important things to note now are: First is , there are sellers sitting above 13140 levels and there was not a clear rejection, so prices might test this poor high in coming days. Second is that there are buyers who are buying every small dips and if smart money wants to distribute, this is a good time for them to distribute. Third is that prices have started moving somewhat sideways on daily chart also as can be seen form a declined slope of trend. Fourth is anything can happen in markets but being long positionally is risky now.
What can be expected now:
Today is last trading day of November and there is a long weekend upcoming. So, we can expect less participation mostly resulting in a sideways move or a small move. Prices accepting above PDH would be good for buyers but there are less chances of poor high getting tested today. Similarly, prices below PDL is good for sellers but there is less chances of PDL also getting tested today. Having said this, I might look for mean reversion opportunities at IB extremes with a short movement view.
Trade plan for today:
Nifty is expected to above or near PDH and am not clear on open auction, So I will best ignore any open auction trade and will wait for IB range formation. In case the acceptance is sideways as I am expecting , I will look for mean reversion trades on rejection at IB extremes or range extremes. This is also good day to ignore any trades because of a long weekend due to which less participation is expected.
- This is long weekend, so do not carry any overnight risky positions.
- Sometimes , its better to stay out of market and observe what market is trying to do. Today can be one such day.
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.