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 below previous day’s range and immediately there was a strong responsive buying that took prices immediately inside previous day’s range. After IB range formation, prices broke to the upside leaving a large buying single print which is indication of higher timeframe buyers, so we are bullish in banknifty for today. But we need to get a follow through to upside above PDH and then watch out for trade facilitation on upside. Until the single print area holds (price trade above that), there is no point looking for short trade. Also, in case there is acceptance in single print area, there is a likelihood of prices remaining sideways in the single print zone (32000 to 32300).
What can be expected now:
Banknifty is moving basically sideways from last 4 days and today we need to see if it breaks out above this range or the sideways movement continuous. For this, price action at PDH becomes very important. I am not expecting Banknifty to go below PDL, so i would be avoiding any short trade in Banknifty but then anything can happen in markets. It is better to go long than go short in Banknifty as Nifty is clearly moving strongly on upside.
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