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 Friday, Banknifty opened above PDH with a good upward bias but buyers were not able to give any follow through to the gap up open and for the entire day , prices moved sideways at PDH forming a non-trend day in Banknifty. Similar to Nifty, there are few things to note : The previous day’s range is from March series and Friday’s price action was in April series, so they do not had a direct connection because of which the gap up open had a little meaning. Second is buyers were struggling to take prices up above PDH but sellers were also not able to put prices back inside previous day’s range decisively, so there is no clarity on who was dominating on Friday. Or in other words, what was the big money doing on Friday- accumulating or distributing is not clear yet.
What can be expected now:
Today, we need to watch price action with reference to previous day’s level and then form a directional view based on strength/weakness of buyers or sellers. In case of price acceptance above PDH, buyers will be in greater control but in case of acceptance below PDL, sellers will have an advantage over buyers. In case prices continue sideways movement inside previous day’s range or if there are rejections at range extremes and there is exhaustion of either buyers or sellers, we can assume there is unfinished business in short term and prices will probably not show any good directional move. In that case , we need to be cautious above our trade or may be we can ignore the trades till prices settle down.
PDH (33835) and PDL (33333) are the levels to look out for from previous day’s range. Above POC, we can test poor high levels of 34420 and below PDL , there is virgin POC levels of 32960 which can be tested. Acceptance below virgin POC will not be good for buyers in coming days and we can go back and test swing low at 32400 and possibly move below it.
Trade plan for today:
Banknifty is expected to above previous day’s range near PDH and there is a volatility expected like Friday and trading open auction would be difficult. I will wait for IB range formation and then take a trade according to the levels where IB range is formed. I am positively biased if prices is accepted above PDH and negative if prices are accepted below PDH and will look for a trade accordingly after IB range formation.
- Short trades are risky if prices trade above PDH.
- No long trade if prices trade below PDL.
- In case of sideways more, we can ignore any trades for today.
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.