Pre-Market Analysis: Banknifty Future – 4th Feb 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, HVN (High volume node)

Observation from previous day:

On Wednesday, Banknifty opened near PDH and sellers aggressively took prices down at the start but buyers pitched in from POC and took prices back above PDH. This shows that although sellers are interested at higher levels, still buyers are having the upper hand. But, though buyers managed to put prices back above PDH, the trade faciliation was not very good in later half and Banknifty moved sideways in the later half forming a NVD on upside. Now this sideways move can mean two things: Absorption of supply by higher timeframe buyers or exhaustion of Buyers which means two opposite things. We will have this clarity only once we get or do not get a follow through to upside above PDH.

What can be expected now:

Today we need to see if we are able to follow through to upside or they struggle to test PDH. In case of acceptance above PDH, we can see further upside and in case if prices remain inside previous day’s range, they can move sideways having one more exhaustion giving a possibility of a quick intraday down move as Inventory adjustment break. But since, today is expiry, option writers will try to keep Banknifty range bound, so we need to be cautious about that too.

PDH and PDL 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.

Trade plan for today:

Banknifty is expected to open inside previous day’s range near POC and there is no clarity at open auction. I will look for a long trade only if prices break PDH decisively otherwise not. In case buyer’s show exhaustion and prices fail to break above PDH, i might look for a short trade later in the day. In case of no clear acceptance/rejection near PDH, i will probably stay out.

Some cautions:

  1. Watch out for price acceptance above PDH. In case of buyer’s exhaustion and buyers not able to keep prices above PDH, there is a chance of sideways to downmove.
  2. No short trade if prices are above PDH. Both indices are at all time high and acceptance above PDH means higher timeframe still want to take prices up.
  3. Today is expiry, so in case prices remain sideways, they are likely to end sideways.


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.

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