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, Nifty opened above previous day’s range and buyers tried to push Nifty but as expected we had some sellers at psychological level of 15000 and they tried to defend this level preventing buyers to mark prices up. Interesting this is that, after rejection above PDH, sellers also failed to mark prices much down side and for the entire day prices kept hopping near PDH and ending at same level it opened near PDH forming a non-trend day. Now what we can infer from this move is that even tough sellers are present above 15000 levels, buyers are also not ready to give up yet. From smart money perspective, it is not clear if this is absorption of supply or exhaustion of buyers but a follow through in either direction will give clarity on what this is. On higher timeframe , we have made a higher high but we have lost momentum.
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 again if buyers do not allow prices to move down, we might have a volatile day with wild swings and that is not easy to trade. So, be cautious about it. Also, in case prices are accepted below PDL, we can see sellers dominating and probable start of downswing which can take prices further down. But, until prices are accepted above PDH, there is no point looking for short trade as we are in upswing and its very risky to trade against the trend.
PDH (15008) and PDL (14867) are the levels to look out for from previous day’s range. Above PDH, there is uncharted territory and acceptance above PDH is good for bulls. But in case of rejection above PDH, we can probably test PDL again. In case prices accepts below PDL, we can look for testing of poor low at 14730 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.
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.