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 near PDH and after an initial consolidation of absorption of supply, it broke above PDH and started one time framing upside. This development was significant and this one time framing is most probably due to higher timeframe buyers and this signals the buyer’s strength but we need to see a follow through on the upside today. On daily charts also, nifty is clearly moving up so it would be better to be on the long side but also we need to be cautious of any buyer’s exhaustion as short timeframe sellers would be looking for such an opportunity to quickly mark the prices down.
What can be expected now:
Any acceptance above PDH would be good for bulls but we need to be careful about the trade facilitation on the upside and this has become a norm from some days. In case we enter a long trade, it would be good idea to keep a tight watch and trail stop loss whenever possible. For sellers, we need to see a strong rejection but until that happen, it would be good not to enter any shorts.
Trade plan for today:
Nifty is expected to open above near PDH and I am expecting buyers to move prices up today above PDH but now a days, initiative buyers seems to be missing , so I will not be looking for open auction trade and look for a long trade only once sellers fail to push prices down. I am not looking for any short trade till we trade above PDL today.
- 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. In fact, i will not be looking for any short above PDL if there is no clear rejection.
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.