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, Banknifty opened inside previous day’s range and moved little upside initially but then for the entire day, it just went sideways. This looked like a planned expiry by option writers (cannot be better than this) where they eat up all premiums. So, nothing much can be made out from this day and we still have no clarification on this sideways move if this is re-accumulation or distribution (so, yesterday’s analysis is still valid). One thing which is noticeable is that this sideways move was near the lower end of the range in Banknifty which does not look good for buyers. If we break below Swing low, there are good chances of prices starting downswing. but, we will wait for a follow through or rejection below swing low in Banknifty for confirmation.
What can be expected now:
Banknifty is expected to remain sideways unless we see a clear acceptance above or below previous day’s range which also overlaps with sideways range. So, price action at PDH and PDL becomes very important. Acceptance above PDH can give a good move to upside and test swing high and in case of acceptance below PDL, we can go a test virgin POC levels of 34900.
PDH and PDL are the levels to look out for from previous day’s range. Above PDH, Prices can test swing high anmd in case prices accepts below PDL, virgin POC (34900) is important.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and there is no clarity at open auction. Only in case prices move to either direction breaking PDH or PDL and no rejection from opposite side, i will plan to take trade in that direction.
- Watch out for price acceptance above PDH. In case of price acceptance and sellers weakness, we might see a good move above PDH in Banknifty.
- No short trade if prices are above PDH and 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.