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 bullish tried to break above PDH but there was a selling pressure above PDH and Nifty moved sideways there after with a lot of volatility which was expected due to expiry. There is a poor trade facilitation by buyers from some day and what has been happening is buying of all dips without pushing the prices higher. So, we need to be cautious as bigger inventory adjustment break could be on the cards.
What can be expected now:
There is not much clarity from some days and today also, we need to observe the price action for further clues. Due to holiday overseas, there might be low volume today also and it will not be easy to trade intraday, so we need to trail tight in case of any trade. Acceptance above PDH is good for bulls, acceptance below PDL is good for bears and prices remaining inside previous day’s range could mean another sideways day.
Trade plan for today:
Nifty is expected to open near PDH and we need to watch price acceptance or rejection above PDH and then plan trade accordingly. I will be looking for a long trade on acceptance above PDH or OTD up at PDH and short trade only if prices are clearly rejected above PDH and move back into previous day’s range.
- Today is first day of 2021 and holiday in the west, so volumes can be low.
- If nifty does not give a clear direction, it would mean only short timeframe players are involved and it would be better to stay out in that case.
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.