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 Tuesday, Banknifty opened above previous day’s range with a gap up which looks like due to high bullish momentum and also strong overseas clues. There was a good buying in the start which faded out after IB range and hence a normal day was formed. Now, we need to see if we get a follow through to upside or else we see buyer’s exhaustion at these levels. A follow through to upside would push the prices even more higher and then we can infer that the shorts from the previous down move might have covered up, which would give us clues to turn bullish. But as of now, I will still wait and watch the price action.
What can be expected now:
Today we need to see if we are able to follow through to upside or get rejected above PDH. This price action at PDH will be crucial for analysis and we can take trades accordingly.
PDH (34750) and PDL (33600) are the levels to look out for from previous day’s range. Above PDH, there is uncharted territory and below PDL, we can look for gap filling at 33475 first and then VWAP at 32130.
Trade plan for today:
Banknifty is expected to open near PDH and there is not much clarity at open auction. I will wait and watch for price action above PDH and only in case prices are accepted back inside previous day’s range, I would be looking for a short trade otherwise not. In case prices gets comfortably accepted above PDH, I might look for a long trade later.
- 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 is a thumbrule. If any one did not folowed it yesterday, he would have lost good money.
- Banknifty is now at all time high, so above PDH is uncharted territory and we need to see how prices behave there.
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.