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 Monday, Banknifty opened above previous day’s range and after buyers failed to test PDH, prices drifted downwards whcih was contrary to the strength in Nifty which was accepted above previous day’s range. Over all, the day was and entire inside day and we are more interested to see which direction it breaks. This type of discord between indicates leads to volatility and confusion.
What can be expected now:
Today we need to see if there is a breakout in Banknifty above PDH or buyers are not able to take prices above PDH. In case buyers are weak, we can see once more sideways to down mobe in Banknifty. If prices move further upside above PDH, we are moving into uncharted territory and we can further move upside . Only is case prices are accepted below PDL, we can see a start of downswing but we need to be careful about shorts and Nifty is showing strength by value area shift continuously in up direction.
PDH 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 indicating a breakout. 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 near PDH and there is no clarity at open auction. I will be lookign fro long trade in Banknifty only iof prices are accepted above PDH and I am not in favour of short trade unless there is a very good clear opportunity in Banknifty which is also supported by Nifty.
- Watch out for price acceptance above PDH. In case of price acceptance and sellers weakness, we migth see a good move above PDH in Banknifty.
- 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.