Pre-Market Analysis: Nifty Future – 14th Jan 2021

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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 tested PDH but there was no follow through to the upside and as a result of buyer’s exhaustion, sellers were able to puch prices back inside previous day’s range. After a further sideways move inside previous day’s range, sellers tried to take prices down sharply but failed to even test PDL and prices cosed inside range. In case we hold on to these levels and do not move down below PDL, buyers will have the upper hand and prices migth eventually move upwards.

What can be expected now:

Today is expiry, so sideways move is in the best interest of option writers. So, we can expect a sideways move today. There can be a good upmove only in case of a clear aceptance above PDH. I will not be looking for any short trade today.

Trade plan for today:

Nifty is expected to open inside previous day’s range and there is no clarity at open auction. I will observe where prices are getting accepted today and then plan a trade but as long as we are trading above PDL, i will be looking only for long trades. Another good option is to take a non-directional trade using option strategies in case prices get accepted inside previous day’s range.

Some cautions:

  1. Today is expiry, So in case prices remain inside previous day’s range, there is a higher likelyhood of consolidation and sideways move.
  2. 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.

Disclaimer:

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.

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