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 Monday, Nifty opened inside previous day’s range and aggressive or initiative selling pushed prices below PDL. There was a buying attempt after midday to push prices back inside previous day’s range but sellers defended the day’s high and pushed prices back down to end at low of the day creating a NVD on downside. Now, though this was the follow through by sellers but there was a good selling exhaustion after the initial move down which indicates that even though sellers were present from higher timeframe, they were not strong enough or conviction was missing or may be higher timeframe buyers have not given up. Therefore, we can expect things to be volatile now and there will be a struggle for control. So, prices trading above PDH would mean buyers have control, Prices trading below PDL would mean sellers have control and prices trading inside previous day would mean the struggle continues.
What can be expected now:
This down move from last two days is a correction in uptrend on daily timeframe. So, one thing we need to watch is where this correction is stalling and if at all it is stalling or not. But from Intraday perspective, prices trading above PDH would mean buyers have control, Prices trading below PDL would mean sellers have control and prices trading inside previous day would mean the struggle continues. So, we can plan directional trade only if prices are trading beyond range and in that direction.
PDH (14459), VWAP (14340) , PDL (14250) are levels to watch out for price action. Above PDH, VPOC at 14520 and weak high (14622) are the levels and below PDL, weak low at 14077 are the levels to watch for today.
Trade plan for today:
Nifty is expected to open inside previous day’s range and I do not have much clarity at open. So, I would wait to see price action at open and see where prices are getting accepted and then plan my trade later accordingly. Also, if I do not get good opportunity, I might ignore any trades for the day. Also, before taking any trade, i will also check what Banknifty is doing and if it is in sync with Nifty or not.
- No longs below PDL and no shorts above PDH.
- Keep an eye on Banknifty and see if it is in sync with Nifty or not. For example, if nifty is rejected above PDH but Banknifty is accepted above PDH or vice versa, its better to avoid trade or trade small.
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 state