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 Tuesday, Banknifty opened inside previous day’s range and after sideways move during IB range formation, buyers tried to break above IB high and PDH but were met with a strong opposite selling force which took the prices back to IB low. But interestingly, sellers did not gave a follow through to downside and prices scaled back up again to close above PDH forming a NVD day on upside and value area shifting higher. But then, there is a lot of volatility in this move, so we can say that multiple timeframes are involved for now and until that resolves, we might see same volatility and trading these markets would be a challenge.
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 at 34810 on upside. Acceptance below PDL can take prices further down and we can test poor low at 33410 and acceptance below poor low can see a good fall in Banknifty.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and I will for IB range formation and observe the price actions. Due to volatility, trading Banknifty would be difficult and until i get a very good opportunity, I will probably skip trades in banknifty today.
- 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.