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, HVN (High volume node)
Observation from previous day:
On Thursday, Banknifty opened below previous day’s range with a gap down and prices moved sideways for msot of the day owning to monthly expiry. In the last, there was a sharp rally due to sellers exhaustion but I will not count much on that if we do not get follow through to upside. There is not much clarity in Banknifty as of now and for coming days we need to see if sellers are able to push prices further down or not. Also, there could be chance of a strong reponsive buying but in case the buyers struggle, sellers can again take control.
What can be expected now:
There has been a one way down move from some days, so in case sellers fail to take prices below PDL today, we might see some bounce or a sideways move. But in case of buyer’s exhaustion, that bounce is likely to be sold off. Also, there is an upcoming budget event, so volatility is expected.
PDH (30400) , POC (30000) and PDL (29630) are the levels to look out for from previous day’s range. Acceptance above PDH can give further rise, but rejection above PDH can get prices to test POC and acceptance below POC can test PDL.
Trade plan for today:
Banknifty is expected to open near PDH and I will skip any open auction trades due to expected big swings at open. So, I will wait and watch for rejection above PDH later to take a short trade. Also, I will not be looking for any short trade until prices are above PDH. In case, i do not get a good opportunity, i will not be taking any trade today.
- Watch out for trade facilitation above PDH. In case of buyer’s exhaustion, there is a chance of prices getting rejecting and sellers dominating.
- No short trade if prices are above PDH as if there is any shortcovering, that can be with a sharpo upside.
- Nifty is weaker than Banknifty, so look out for clues from Nifty in case you want to take a trade in Banknifty.
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.