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, Nifty opened inside previous day’s range and after a slow move sideways in the first 1 hour with a slight downward bias, Buyers pitched in from IB low and Nifty started the upward journey to close above PDH. This can be seen as follow through on upside and we can infer from this that OTF buyers are still interested in pushing prices higher and OTF sellers are not interested for now. Also, trade facilitation in up move matters and we need to be cautious on buyers if trade facilitation becomes poor. Also, Yesterday, Banknifty gave a good breakout above Previous day’s range and also above consolidation range without much resistance from sellers (and this was not what I expected, but market can do whatever it wants). So, there is no point going against the trend unless we see clear signs of OTF sellers entry.
What can be expected now:
We can expect Nifty 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:
Nifty is expected to open inside previous day’s range at the upper end and I would be looking for signs to weak selling to enter into a long trade. This could be the break of PDH at open also. For any long positions, I will try to make the trade as breakeven in case of any favourable move. I am not looking for any short till prices are trading above PDL.
- Watch out for trade facilitation above PDH. IN case of buyer’s exhaustion, there is always a chance of sharp breakdown.
- Banknifty was very strong yesterday. If prices trade above PDH in banknifty, it will be a good bullish sign.
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.