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 near HVN and there was a initial struggle between buyers and sellers and the prices moved sideways in the first half but in second half , sellers dominated and moved the prices sharply down forming a trend day to downside. This down move was not what I had expected but I had clearly warned of no long trades below PDL and this is the same warning again. Banknifty can again fall today if prices start trading below PDL.
What can be expected now:
Today, we need to observe if prices are getting accepted below PDL or getting rejected below PDL. In case of acceptance below PDL, there is a chance of further down move but we need to be careful of any exhaustion of sellers.
PDH, VWAP and PDL are the levels to look out for from previous day’s range. Below PDL, banknifty can fall futher.
Trade plan for today:
Banknifty is expected to open near PDL and we need to see if prices are getting accepted below PDL or not. Also, i would be looking for an OTD down (open test drive down) at PDL to take a short trade but in case of any exhaustion of sellers, this trade might turn risky. But until prices, trade below PDL, i would be only looking for a short trade. Only in case prices are clearly rejected below PDL, i might look for a long trade but that is later in the day.
- 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.
- Don’t try to catch falling knife, so dont try to go long if prices trade below PDL.
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.