Pre-Market Analysis: Banknifty Future – 6th 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 Tuesday, Banknifty opened inside previous day’s range and after a initial side ways move, bulls took control and moved prices above PDH indicating a good breakout above the sideways consolidation range and forming a triple distribution trend day on upside. Now, if we have follow through on the upside in a very important questions and in case if we have it, then it is a very good sign for bulls. Although after such a big move, a sideways consolidation cannot be rules out but that should happen above the consolidation range.

What can be expected now:

We can expect Banknifty to move up and trade facilitation matters. In case we see buyer’s exhaustion, we might see sharp breaks due to shorter timeframe sellers (Inventory adjustment break), so we need to be cautious and it is a good idea to trail your stop losses in case of favourable move. I have a bullish view above PDH, a sideways to bullish view inside previous day’s range and I will look for short trades only if prices are clearly accepted below PDL.

Trade plan for today:

Banknifty is expected to open inside previous day’s range at the upper end and I will not be looking for any open auction trade. There could be a dull sideways to up move today but in case of acceptance above PDH, it is good for bulls. I am not looking for any short till prices are trading above PDL.

Some cautions:

  1. Banknifty has broken out of consolidation range to upside. We need to see if this breakout sustains or gets rejected for next 1-2 days.
  2. Watch out for Nifty. Strength in Nifty would be good for Banknifty and otherwise.

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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