Pre-Market Analysis: Banknifty Future – 4th Jan 2021

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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 Friday, Banknifty opened inside previous day’s range though buyers were aggressive in the start, they were not able to take prices above PDH which indicates lack of buying from higher timeframe. Banknifty the moved sideways for entire day. Though nifty was trading above previous day’s range, Banknifty was not able to even test PDH indicating a comparative weakness in banknifty. Now, this sideways move is usually a region where smart money establish their positions, we will only get clarity once a directional move happens, but a test of other extreme before that cannot be ruled out.

What can be expected now:

I am expecting volumes to pick up in banknifty and also the volatility. We need to watch price action beyond extremes if it is getting accepted or rejected. As, of now, there is not much clarity in Banknifty and in case of another sideways move, we need to be cautious of any trade or can opt to stay out. Above PDH, swing high at 31550 is a level to watch out for.

Trade plan for today:

Banknifty is expected to open above PDH and we can test above 31550 levels. Thereafter, acceptance or rejection above 31550 is important. I am not looking for any open auction trade or for that matter any trades in Banknifty today unless I get a very good opportunity.

Some cautions:

  1. Nifty is stronger than Banknifty, so until Nifty continues to move up, there is likelyhood of any dips being bought in banknifty also.
  2. Before a good directional move, Market likely (and not compulsorily) test the other extreme for any pending business. Be aware of this.


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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