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, Nifty opened just above PDL and sellers broke PDL immediately at open for forming Open high on Nifty. This is the follow through we were talking about in yesterday’s post and it did come which means Nifty is now in control of sellers. Also, on higher timeframe , it looks like we are in down swing, so we need to be cautious on our long trades. Also, Trading a bear market is never easy as it often has sharp retracements (up moves), so we need be more observant about price action if we want to trade intraday else it is also a good idea to ignore intraday trades in downtrend. One thing that changes in Bear market is that we need to book partial profits in case the trade becomes profitable because of wild swings.
Today is also beginning of new series and we need to see where are prices getting accepted. A upward movement cannot be ruled out in shorter timeframe but till we trade below 14650 levels, I would be looking for short trades only.
What can be expected now:
Nifty has given a follow through to downside. Today is beginning of new series, so prices might open up and inside previous day’s range and we need to observe price action carefully before taking any trade. IN case prices keep trading inside previous day’s range, i am assuming today would be a sideways market but in case if prices break below PDL, we can see a good down move again.
PDH (14560) , POC (14400) and PDL (14360) are the levels to look out for from previous day’s range. The levels are not accurate as this is a new series, so in addition to levels, we also need to observe the current context of price action at any levels.
Trade plan for today:
Nifty is expected to inside previous day’s range and there is no clarity at open. Open can be volatile due to new series, so its not a bad idea to ignore open auction and let prices settle. I would wait for IB range formation and based on the IB placement, I will look for trades, but I will be majorly looking for short trade today if prices remain below 14650 levels.
- Short trades are risky if prices trade above PDH.
- No long trade if prices trade below PDL.
- Today is start of new series, so there is no clarity on open auction.
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.