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 Wednesday, Banknifty opened inside previous day’s range and sellers took the prices immediately below PDL from where it never recovered but prices moved sideways after breaking PDL and formed NVD on the downside. Again, though sellers moved the prices down, the sideways movement can mean exhaustion of sellers in which case, prices might move up. So, in case of sellers still in control, we need a follow through to the down side which is very necessary. So, until prices trade above PDL in Banknifty, short trades are risky.
What can be expected now:
We need to watch price action in banknifty at PDL to get a sense of what yesterday’s sideways move meant. A follow through to downside will put sellers in good position but any rejection below PDL is not good for sellers. Also, if prices are not able to test PDL, that is not good for sellers again as the follow through will be missing then. Also, today is expiry , so we need to be cautious about volatility.
PDH (33945) and PDL (33360) are the levels to look out for from previous day’s range. Above PDH, we can test poor high levels of 34180 and below PDL , there is virgin POC level of 32960 which can be tested. Acceptance below PDL will not be good for buyers .
Trade plan for today:
Banknifty is expected to open inside previous day’s range and I usually avoid open auction trades in Banknifty. But as Banknifty is weaker than Banknifty, again a weakness in Banknifty will give us the confirmation for short trade in Both Nifty and Banknifty. But in case, price show positive trend at open or if one of the indexes is strong and other is weak, I will ignore any trade till this resolves. Acceptance below PDL is not good for Banknifty and we can look for short trades later if that happens. Also, today is expiry, so be careful towards the end and watch out for any volatile moves.
- 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. Today is expiry, so be careful with your position size.
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