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, Banknifty opened above previous day’s range with a gap up and continued moving sideways to slightly up for most part of the day and tested the swing high. Though is looked like acceptance above PDH, the buyers were not able to give follow through to the upside after testing swing high and as a result of it, we got a big intraday inventory adjustment break which took prices below PDL and tested both VPOC below PDL. Also this last hour down move does look like some big money moved it down to hit option sellers on expiry day. But now expiry is over, we ned to see if we get any follow through on downside, otherwise price might again go up and test PDH.
What can be expected now:
We need to watch price action at PDL to see if the inventory adjustment break is over or if market wants to move down. Any acceptance inside previous day’s range would be not good for sellers and we might move sideways to bullish.
PDH (32900) and PDL (32000) are levels to watch out for price action. Below PDL, swing low at 31695 is the levels to watch out for.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and we do not have any clarity at open auction and open auction can be volatile but if prices are not able to break PDL, I would be looking for long trades only later in the day. No long trades below PDL.
- No longs below PDL and no shorts above PDH. Also, in case of no proper entry, better to stay out.
- We need to watch Nifty also and look if this inventory adjustment break was from short timeframe sellers or if we are getting a selling follow through downside.
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