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 Friday, Banknifty opened above previous day’s range and sellers took the prices back inside previous day’s range in the start but were unable to move prices down below PDL. Also, buyer’s also failed to take prices back up above PDH and Banknifty consolidated in a narrow range for the entire day. SO it looks like they is no OTF interest in Banknify for now. ON the other hand, Nifty moved up strongly above PDH and in case of further strength in Nifty, it is likely to reflect in Banknifty and Banknifty can move up above PDH other wise weakness in Banknifty is not good for Nifty. Bother the indices for now are showing different signs and we need to see which one resolves so both get into similar behaviour.
What can be expected now:
Banknifty will be bullish if accepted above PDH, SO, PDH is very critical level to watch out for today. Also, Acceptance above PDH should see a good trade facilitation to upside other wise exhaustion above PDH will not be good for buyers in intraday perspective. Also, rejection above PDH will not be good for buyers and in case of any strong rejection, sellers might dominate and move prices below PDL .
Trade plan for today:
Banknifty is expected to open above previous day’s range and I do not have any clarity at open auction, so, I will wait and watch to see if prices are getting accepted or rejected above PDH and later see how is the trade facilitation. On in case of certain clarity and a good entry, I would be opting for a trade today otherwise I will just watch and stay out.
- 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. Also, in case of no proper entry, better to stay out.
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