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, Nifty opened above previous day’s range and sellers were not able to push prices down to test PDH but then there was also momentum missing with the bulls and price consolidated in a narrow sideways range. Although there was poor trade facilitation, the entire day’s range was above PDH and the gap also sustained. So, as long as we are continuously trading above previous day’s range, uptrend in intact and we should look out for long trade. Only in case of clear rejection, we can look out for short.
What can be expected now:
Today we need to see if prices move further upside above PDH or struggle above PDH. For now, we can assume that buyers are stronger in Nifty but in case prices get rejected above PDH, there is a chance of prices moving sideways to down. Only in case prices are accepted below PDL, we can see sellers dominating but until that happens, i will be looking at current price action as absorption of supply and 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 and PDL 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. Only 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 near PDH and I will wait to see price behavious at PDH at open auction before jumping into any trade. We need to see if prices are accepted above PDH or rejected above PDH. Only in case of acceptance above PDH, i would be looking for a long trade but in case prices are rejected above PDH and are accepted back inside previous day’s range, I might look for short trade. The short trade in this point of time is going to be risky, so we need to trail it tight and can use less position size for shorts.
- 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.
- Banknifty is weaker than Nifty, In case Banknifty also breaks above PDH, long trades are a good chance.
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.