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, Banknifty opened inside previous day’s range and there was a failed attempt by buyers to take prices above PDH in start and prices then started moving sideways with a downward bias breaking IB low and forming a NVD day on downside. But this all price action happened was inside previous day’s range and sellers were also not able to take prices below PDL. As of now , nothing is cler in Banknifty but Nifty is relatively strong. So we need to see today if Nifty pulls up Banknifty or Banknifty pulls down NIfty. Till both indices are in sync, we can expect Banknifty to be volatile.
What can be expected now:
Today, we need to observe where prices are getting accepted in Banknifty. Acceptance above PDH is bullish, below PDL is bearish and inside previous day’s range would mean the struggle between buyers and sellers continue and one more sideways day with not much clarity.
PDH and PDL are the levels to look out for from previous day’s range. Above PDH, we can continue upside and test weak high and poor high levels on upside. Acceptance below PDL can take prices further down and in case of prices accepting inside range or any rejection from PDH or PDL, there also be sideways move.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and i will wait for prices to break beyond previous day’s range to determine my trade and direction of trade. Also, i will be looking for any rejections beyond previous day’s range to opt for mean reversal trades but only if price action in Nifty is supporting my direction of trade in Banknifty. In case prices trade sideways, I will ignore any trade in Banknifty.
- No short trade above PDH and no long trades below PDL.
- We need to wait for acceptance beyond extremes and just testing of extremes is not valid to take a trade.
- Observe Nifty also. Nifty is stronger than Banknifty, so in case of a long trade opportunity in Banknifty, Nifty should be supporting.
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.