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 Friday, Banknifty opened above previous day’s range and aggressive buying took prices on upside in the start giving rise to a 1000+ points IB range and there after market moved down for the rest of the day with wild swing and gave up then entire 100+ points up move. This type of move can be seen as buying climax with a possible beginning of down swing but what we can observer also is that value area and in fact entire range of Friday’s trading was above Previous day’s range, so we still are in upswing. Therefore, we need to carefully observe today’s price action and see if prices are getting accepted below PDL or not. In case prices move sideways to upside today, we can assume that sellers are from lower timeframe and uptrend will resume soon.
What can be expected now:
Today we need to see where the prices are getting accepted or rejected in banknifty. If prices move further upside above PDH, we are moving into uncharted territory and we can further move upside., but in case prices get rejected above PDH, there is a chance of prices moving sideways to down but there would be a support again at PDL and virgin POC at 34920 levels. Once prices accept below 34920, they can go down to test PDL.
PDH (36640) , POC (35800) and PDL (35480) 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, virgin POC (34920) is important.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and there is no clarity at open auction. I am not comfortable taking a trade in Banknifty due to high volatility unless here is a very good opportunity. In case I get good opportunity, I will be looking for long trade above PDL and short trade below PDL otherwise no trades
- Watch out for price acceptance below PDL. In case of seller’s exhaustion and sellers not able to mark prices down below PDL, 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.
- No long trades below PDL, Prices below PDL may indicate a start of downswing and going long will be very risky.
- 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.