Pre-Market Analysis: Banknifty Future – 29th Dec 2020

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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, Banknifty opened just near PDH and broke above previous day’s range immediately. Thereafter a consolidation happened with another upmove towards the end. This shows the lack of sellers strength, so we might expect Banknifty to move up unless we see clear signs of sellers.

What can be expected now:

There is not much clarity on Banknifty and prices are now at important level of last swing high. Acceptance above PDH might push prices up but rejection above PDH will not be good for bulls. Above PDH also, the trade facilitation by buyes becomes critical.

Trade plan for today:

Banknifty is expected to open near PDH and we need to see if prices are getting accepted or rejected above PDH. I will be bullish in case prices are accepted above PDH and bearish below PDH but I will not opt for open auction trade and will wait for prices to settle down before opting for a trade.

Some cautions:

  1. As indicated, trade facilitation at the highs is important as we need to see if last inventory adjustment break threw out short timeframe sellers or not.
  2. As we approach year end, volumes can dry up due to holidays.
  3. Both indices – Banknifty and NIfty need to show similar signs for a good trade. Infact since Banknifty was weaker than nifty, it needs to show more bullish signs than nifty for a good upmove.

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, Bank-nifty in above statements Indicate Bank-nifty future for current month and not Bank-nifty index

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