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 inside previous day’s range but at the lower distribution curve and sellers pushed the prices below PDL from the start giving us the expected follow through to downside. After a big range IB formation, nifty broke IB low but then sellers struggled to take prices further down and we got a small rally in the end testing the PDL levels again. Now, this up move of prices in the last hour was mostly as result of sellers exhaustion, so there are chances of further up move only if sellers are weak or absent or from lower timeframe, but in case the sellers that marked the prices down in last two days are from higher timeframe, we might see a further down move either today or in coming days. Therefor we need to watch price action today and in coming days with this understanding.
What can be expected now:
Today we need to see the strength of sellers in the market from the price action inside previous day’s range. I have a bearish outlook if prices trade below 15150 levels and will turn bullish only if prices are accepted above this level. Also, in case sellers want to take prices down, they should test and break PDL today otherwise more sideways movement without breaking PDL will look like sellers exhaustion and a chance of potential short covering will open up in that case.
PDH (15070) and PDL (14770) are the levels to look out for from previous day’s range. Above PDH, we can test Trend day VWAP levels of 15155 where price action will decide if market is in control of sellers or not. In case prices move below PDL, poor low at 14675 level can see some support and price action there becomes important.
Trade plan for today:
Nifty is expected to open inside previous day’s range near 15000 and there is no clarity at open auction. I am bearish till prices trade below 15155 levels, so I will be looking for a potential short trade in case prices test PDH or 15155 levels and gets rejected from either of these later. Only in case of price acceptance above 15155, I will look for a long trade later. IN case prices stay inside range and do not test any levels, I will wait for IB range formation to look for a trade later.
- Long trades are risky if prices trade below 15155 levels.
- No long trade if prices trade below PDL and no short trade if prices trade above 15155 levels.
- Watchout for Banknifty also and see if both indices are showing similar signs for direction 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, Nifty in above statements Indicate Nifty future for current month and not Nifty index.