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, Bank nifty opened inside previous day’s range and buyer’s tried to take prices above PDH and failed. Also, sellers were not able to take prices even below POC levels of 32575 which shows the absence of higher timeframe sellers. Now, as we expected, the entire move was sideways due to expiry but one thing to note is that the value area was formed on upside which is indication of trend continuation upside and we have buyers still in control of Bank nifty.
What can be expected now:
If we look at larger picture, yesterday’s price action can be seen as absorption of supply and this supply has all been from shorter timeframes. So, we can expect Bank nifty to move above PDH (32860) levels and there after trade facilitation matters. If prices are accepted above PDH, we can expect a good upside in Banknifty today. Also, it is not advisable to look for short trade in Bank nifty unless we have a clear rejection from the highs. In case of acceptance inside previous day’s range, we can wait till sideways consolidation is over and then look for breakout on upside.
Trade plan for today:
Bank nifty is expected to open inside previous day’s range and I will not opt for trade in open auction and will wait to see where prices are getting accepted or rejected. Acceptance above PDH or even inside previous day’s range is good for long trade. IN case price start trading below PDL, i will ignore any long trades in Bank nifty.
- Watch out for Nifty. Lon trade is good if both the indices are trading above PDH, otherwise it is little risky, so we can trail tight in case we get into a long trade.
- 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