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)
On Tuesday, Banknifty opened inside previous day’s range near PDH and there was an immediate responsive selling and sellers pushed the prices down. Though the prices continued to move down and ended up forming a NVD on downside, there was big upswings which indicates that higher timeframe buyers were also present and were trying to take prices up but higher timeframe sellers were dominating. So, we can expect these kind of wild swings unless one of the higher timeframe gives up and another dominates but till that happens, trading is going to be challenging.
On overall basis as said in yesterday’s post also, Until we trade above 35835, i will be having a negative bias and will look for short trades.
What can be expected now:
Today, we need to observe if prices are moving beyond previous day’s range which could be an indication of higher timeframe dominating on that side. But then, we need to be cautious of any rejections at extremes and this struggle between buyers and sellers continuing.
PDH (35490) and PDL (34790) are the levels to look out for from previous day’s range. Above PDH, we can test Trend day VWAP levels of 35835 where price action will decide if market is in control of sellers or buyers have taken the control. In case prices move below PDL, virgin POC at 34575 and poor low at 34450 can see some support and price action there becomes important.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and there is no clarity at open auction. Although, I have a bearish view but it is clear from price action that there is ongoing struggle between higher timeframe buyers and sellers and this could lead to wild swings. Therefore, i would choose to ignore trades in banknifty until this settles and I will be looking for opportunity in Nifty only.
- Long trades are risky if prices trade below 34840 levels.
- No long trade if prices trade below PDL and no short trade if prices trade above 34840 levels.
- In case of wild swings, its better to ignore Banknifty as it can take your stoploss easily.
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.