Pre-Market Analysis: Nifty 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, Nifty opened inside previous day’s range and bulls took prices above PDH. After the initial strong move, there was again exhaustion above PDH and price moved sideways with a slight upper bias. Also, Banknifty remained mostly sideways in narrow range. So, it seemed that higher timeframe sellers are missing but then higher timeframe buyers are also not very aggressive. Though, we have a directional move, this sluggishness can be used by smart money to slowly establish their positions (accumulate or distribute) and we will get clarity on their actions only once we get a decisive move in one direction. What we need to look out for now if whether prices will get accepted or rejected once we have a good directional breakout.

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. Acceptance above PDH is bullish, acceptance below PDL is bearish and we might trade sideways with a downward bias in case prices are accepted inside previous day’s range.

Trade plan for today:

Nifty is expected to open with a big gap up above PDH as indicated by SGX nifty and we need to see if sellers take this opportunity to start a directional move downwards, or still there is pending business. Open auction trade is risky and I will avoid it. I will look for long trade later only if prices get accepted above PDH otherwise I would be looking for a shorting opportunity.

Some cautions:

  1. Volumes are expected to be back and I expect to see a good directional move in some days but there is a volatility expected before it.
  2. Banknifty is trading in a very narrow sideways zone, so watch out for Breakout /Breakdown or False breakout in Banknifty to get clues in Nifty.

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, Nifty in above statements Indicate Nifty future for current month and not Nifty index.

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