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 Wednesday, Nifty opened above previous day’s range and failed to give a follow through to upside. There was a lot of struggle for some time indicated by a sideways move at PDH and then sellers pushed Nifty below IB low to test PDL from where buyers pitched in and closed nifty back inside previous day’s range. Now, there are two things to look at – Failure of sellers to push prices below PDL means the sellers are still from shorter time frame. Exhaustion of buyers at higher levels indicates absence of OTD buyers conviction to move prices up but they are support every down move, so they do not want the market to move down either. So, just like yesterday, it becomes important to see what levels we are accepting and if thee is a good trade facilitation or not.
What can be expected now:
Any acceptance above PDH would be good for bulls and prices might move upwards. In short term, the break yesterday could be see an inventory adjustment break throwing out weak buyers, but since it left a weak low (PDL is also weak low), there are good chances of prices testing below this level of 14080 in some days. Acceptance of prices inside previous days range can push prices sideways with a downward bias.
Trade plan for today:
Nifty is expected to open inside previous day’s range near PDH and I will look for a long trade only above PDH, either through a breakout at PDH or with a OTD up at PDH. IN case prices get rejected above PDH or trade inside previous day’s range, I will not be looking for any long trade. Later in the day, I will look at acceptance and IB range levels to look out for any further trade, but most probably, I will look for a long trade only above PDH and a short trade below PDH.
- Watch out for trade facilitation above PDH. In case of buyer’s exhaustion, there is always a chance of sharp breakdown.
- Today is expiry, so there can be volatility later if open move is dull.
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.