Pre-Market Analysis: Banknifty Future – 30th 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 Tuesday Banknifty opened above PDH and buyers quickly moved the prices up in start but this was followed by buyers exhaustion and a sharp inventory adjustment break on shorter timeframe to test IB low after which prices moved sideways for rest of the day and prices closed at the upper end of the day’s range. This shows the lack of sellers strength, so we might expect Banknifty to move up unless we see clear signs of sellers. Also, there is a lack of buyer’s participation too but higher timeframes are involved in this upmove.

What can be expected now:

Like Nifty, there is not much clarity now. Until we have a strong rejection indicating entry of higher timeframe sellers, we might continue this upmove and this would be difficult for intraday traders as it seems there is a missing participation by all buyers.

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 we approach year end, volumes can dry up due to holidays.
  2. 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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