Pre-Market Analysis: Banknifty Future – 21th 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, Banknifty opened inside previous day’s range and after an initial struggle between buyers and sellers, prices moved above PDH and closed above PDH forming a NVD to upside but unlike Nifty, Banknifty was more or less sideways and did not even managed to test swing high at 32860. Though swing high can be tested today at open but any rejections at higher levels in Banknifty would mean buyers are not interested to take prices high today and a sideways move may happen due to expiry. But any acceptance above swing high will give room for further upside in banknifty.

What can be expected now:

We need to watch price action at PDH and at swing high (32860 levels) today. Any rejection or buyers exhaustion can lead to a sideways move and acceptance above swing high can give a good up move. There is no point of going short in Banknifty unless we have a strong confirmation.

PDH (32666) and PDL (33350) are levels to watch out for price action. Above PDH, Swing high (32860) are the levels and below PDL, VPOC (32185) are the levels to watch for today.

Trade plan for today:

Banknifty is expected to open above previous day’s range and I would wait to see where prices are getting accepted. Only in case prices start accepting above PDH, I will look for long trade opportunity otherwise I will not take any trades in banknifty today. Also, before taking any trade, i will also check what Nifty is doing and if Banknifty is in sync with Nifty or not.

Some cautions:

  1. Watch out for Nifty. Long trade is good if both the indices are trading above PDH, otherwise in case of any discord, it is little risky, so we can trail tight in case we get into a long trade.
  2. No longs below PDL and no shorts above PDH. Also, in case of no proper entry, better to stay out.
  3. Today is expiry, so watch out for exhaustion for a probable sideways move.

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, Bank-nifty in above statements Indicate Bank-nifty future for current month and not Bank-nifty index

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