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 Wednesday, Nifty opened inside previous day’s range near HVN and sellers tried to push prices below PDL in start but failed. There was a responsive buying from PDL in start but it failed to take out the open high and prices went back below PDL. After IB range formation, again there was a responsive buying which took prices up to test IB high but could not continue further up and then sellers took advantage of weak buyers and pushed the prices all teh way down to test poor lows and forming a NVD day on downside.
Now, take aways from yesterday’s price action is that the buyers were present in all of this move , so even though prices moved down, sellers have to exhibit strong force to make it happen which is evident in last hour down spike and this looks like a forced move.
So, for sellers to remain in control, prices should trade below PDL otherwise there is a good chance of short covering from intraday perspective only. So, we need to watch where prices are getting accepted today – above or below PDL?
What can be expected now:
Today, we need to observe if prices are getting accepted above or below PDL and then decide on the direction accrodingly. Today is also expiry, so we need to be careful that in case of struggle continuing, prices might move sideways.
But in case prices keep accepting inside previous day’s range, i will be looking for long trade. Only if prices move below PDL, I will look for short trades otherwise not.
PDH and PDL are the levels to look out for from previous day’s range. Above PDH, we can test poor high and then Trend day VWAP levels of 15155.
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 and there is no clarity at open auction. There might be an initial upmove in start or there might be first exhaustion of sellers and then upmove which we need to watch carefully but overall I am bullish if sellers are not able to mark prices below PDL and will look for a long trade in that case. Only in case prices move below PDL, I would be looking for a short trade otherwise, I am going to ignore any short trades today.
- Short trades are risky if prices trade above PDL.
- No long trade if prices trade below PDL and no short trade if prices trade above PDL.
- Today is expiry, so a sideways move inside range cannot be ruled out.
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.