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 Friday, BankNifty opened inside previous day’s range near PDL and sellers immediately moved prices below PDL and closed near the bottom of the day forming a trend down day in nifty. But one thing to note is tht even though there was a good down move, the one timeframing was absent in the end and there was a consolidation which indicates that there was someone buying also in every down move. So, there clearly is a struggle going on between multiple timeframe buyers and sellers and it becomes very important to see today whether we get a follw through to the downside or not.
What can be expected now:
Any acceptance below PDL will not be good for buyers and prices might move futher down but any rejection below PDL or acceptance inside previous day’s range might not be good for sellers, especially if market starts moving higher, the last moment sellers of friday would be trapped and in that case, they might try to close positions fueling further rally but this all will happen only in case smart money starts taking prices higher.
Trade plan for today:
Banknifty is expected to open inside PDH and there is no clarity at open acution. We need to see and observe which one is weaker (buyers or sellers) and then try to take trade from the other side. I would probably wait for IB range formation before deciding on a trade but as a thumbrule, i will not be looking for any long trades below PDL and any short trades if prices are accepted inside previous day’s range and starts moving up.
- Watch out for trade facilitation inside PDH. In case of seller’s exhaustion, there is a chance of prices moving up.
- 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.
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, Banknifty in above statements Indicate Banknifty future for current month and not Banknifty index.