Pre-Market Analysis: Banknifty Future – 31th 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 Wednesday, Banknifty opened above PDH and sellers quickly moved the prices back inside range in start but they were not able to push prices below PDL and closed sideways inside previous day’s range. Again, there is no clarity on the direction now and this type of poor trade facilitation will not be good for buyers in the long run but until we see a clear rejection from top, there is not point shorting the market.

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. Also, today is expiry, so in case of acceptance inside previous day’s range, we might end up moving sideways for entire day.

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. Today is expiry and last day of the year., so expect some volatility and uncertainity.
  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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