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, Nifty opened inside previous day’s range and there was a sideways move for the first hour. Once Prices tested below IB low, buyers pitched in and above PDH and sellers aggressively took prices down at the start but buyers pitched in and moved nifty above IB high testing PDH and closing just around PDH. The value area overlapped mostly and even though it looked as trend day, there was not a very clear one time framing. So we need to be cautious on the upside now but as long as Prices accept above PDH, there is no point looking for a short trade (please note that being cautious on longs does not mean short).
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 14835 levels (VWAP). Once prices accept below 14835, they can go down to test PDL. In case of acceptance above PDH, we can test psychological mark of 15000.
PDH , VWAP (14835) 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 go up to psychological level to 15000. In case prices accepts below PDL, we can look for gap filling at 14400 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.
- Nifty is near the psychological level of 15000, so we can expect some profit booking or selling from that levels.
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, Nifty in above statements Indicate Nifty future for current month and not Nifty index.