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 inside previous day’s range and after sideways move for first hours, price tested IB low from where buyers pitched in and moved prices above PDH forming a trend day up and with one time framing. Banknifty was stronger than nifty and we can still say that buyers have the control but there is a discord starting between Nifty and Banknifty, so either Nifty will pull Banknifty down or Banknifty will pull Nifty up and that is something we ned to observe. But, as long as prices are accepting above PDH, there is no point taking a short trade.
What can be expected now:
Today we need to see if prices move further upside above PDH or struggle above PDH. In case prices get rejected above PDH, there is a chance of prices moving sideways to down but there would be a support at 34920 levels (VWAP and POC). Once prices accept below 34920, they can go down to test PDL. In case of acceptance above PDH, we are moving into uncharted territory and we can further move upside.
PDH , VWAP (34920) and PDL are the levels to look out for from previous day’s range. Above PDH, there is uncharted territory and acceptance above PDH can possibly move prices further upside. In case prices accepts below PDL, we can look for gap filling at 33485 levels.
Trade plan for today:
Nifty is expected to open above previous day’s range and even though the momentum is on upside, I am not comfortable taking long trade at open. In case of rejection above PDH, I will possibly look for a short trade if risk is under my control. Only in case of continuous acceptance above PDH for a long time, I might look for long trade later.
- 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 down move.
- 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.
- watch out what Nifty is doing before taking a trade in banknifty for double confirmation.
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.