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 Monday, Nifty opened above previous day’s range with a gap up and after a intitial volatile move, bulls showed exhaustion and were unable to take prices higher. There after , sellers entered and took prices back inside range and tested PDL from where buyers prevented the fall and took prices back above to close market near the highs of the day. Though we were expecting prices to correct, this last correction was from small timeframe smart money and we are higer timeframe sellers have not entered because of may be pending business. Their is a higher timeframe buying happening whenever prices are falling but in case prices fail for move higher, this buying can well turn into a trap. So for buyers to be in control, market should move higher and not sideways.
What can be expected now:
There is still not much clarity and higher timeframe sellers seem to be missing or there still might be pending business at these levels. But if prices continue to move higher and we see no major rejection, bulls will be in control. Yesterday’s down move seemed to be a good rejection at start but prices scaling back the highs have rejected the rejection and we might go a test above PDH from where we need to again watch for acceptance or rejection.
Trade plan for today:
Nifty is expected to open inside previous day’s range and I will only be bullish if prices are accepted above PDH. Above PDH also in case there is a buyers exhaustion, we need to be cautious as it can invite sudden selling like yesterday. Prices trading inside previous day’s range is not good for buyers and I will be looking for shorting opportunities in the case. I am not looking for any immediate trade at open and will watch price action and open levels to egt more clarity.
- Till now, all down moves are done by short timeframe sellers, and they are covering up their shorts after a certain quick directional move. This might continue if we see buyer’s exhaustion and absense of higher timeframe sellers.
- Though Nifty recovered, Banknifty did not, so Bankninfty is clearly weaker than nifty and we ned to watch Banknifty also to get confirmation whether it is supporting the directional move of nifty or not.
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.