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 Thursday, Nifty opened above inside previous day’s range and buyers tried to move prices above PDH but failed. There after prices moved back inside range and moved sideways through the day which was expected due to expiry. This sideways move can also be seen as exhaustion of Buyers and we need to see if they are able to move prices above PDH or not. Another exhaustion of buyers to move prices above PDH will not be good and we might see a downward correction move, but until there is a clear rejection (which is an indication of ITF sellers entering), we need to be cautious on downward moves also as all downward moves from last few days are caused by short timeframe sellers which will reverse any time an OTF buyer enter.
What can be expected now:
Any acceptance above PDH would be good for bulls and prices might move upwards. 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 not be looking for any open auction trade today. Later, I will look for a long trade only above PDH and in case prices get rejected above PDH or trade inside previous day’s range, I will not be looking for any long trade. Also, 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.
- No longs below PDL and no shorts above PDH.
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.