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, Nifty opened above PDH and the sellers were not above to test PDH also whereas buyers immediately pushed the prices on the upside leaving a small gap. The prices continued upward movement with almost one-time framing in Nifty on upside and tested the virgin POC and poor high was we expected from the previous day’s post in case there is acceptance above PDH. Although, Nifty formed a NVD on upside but the move was big in terms of total points, so we can expect prices to take a breather but until we would be trading above 14800, we can assume the control is with bulls. Prices accepting below 14800 is not good indication for bulls and we can be cautious on longs. Another point to notice is that while Nifty was showing strength, there was buyers exhaustion or struggle in Banknifty even though the value area in Banknifty was formed on upside.
What can be expected now:
Today, we need to watch price action with reference to previous day’s level. Acceptance above 14800 levels is good for bulls and acceptance below 14800 levels is not good for bulls. Also, if prices show acceptance above PDH , we might likely test virgin POC at 15010 and poor high levels of 15080 in Nifty. Acceptance below 14800 migth take prices down to test PDL and virgin POC at 14600 levels.
PDH (14950) , POC(14800) and PDL (14687) are the levels to look out for from previous day’s range. Above POC, we can test virgin POC levels of 15010 and below PDL , there is another virgin POC levels of 14600 which can be tested. Beyond that poor high on upside at 15080 and another virgin POC on downside at 14400 are the levels to watch out for.
Trade plan for today:
Nifty is expected to open inside previous day’s range near PDH and there is no clarity at open. 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 14800 (POC) and negative if prices are accepted below 14800 (POC) and 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 also 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, Nifty in above statements Indicate Nifty future for current month and not Nifty index.