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 Monday, Banknifty opened inside previous day’s range at LVN and sellers pushed prices down from the start and then broke PDL forming a huge IB range. After IB range , the prices consolidated Banknifty inside IB range but at lower end and below PDL. Now, we need to know whether this consolidation was Absorption of Demand or not and this will be clear if we get a follow through to downside. So, PDL becomes very crucial today and in case prices break PDL, there is a big down move potential. But until prices break PDL, there is always a possibility of sideways or up move, so short trades need caution. Also, prices accepting above POC (32775) levels is not good for sellers.
What can be expected now:
Banknifty is weaker than Nifty and POC (32775) level is the level to watch out for and see if prices are accepting above or below POC, Above POC is bullish and below POC is bearish. Also, decisive break of PDL can bring a good down move.
PDH (34000) , single print (33000) , POC (32775) and PDL (32410) are the levels to look out for from previous day’s range. Acceptance above single print levels (33000) is not good for sellers and acceptance below POC (32775) is not good for buyers but between this, there is no clarity.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and I will for IB range formation in case prices does not break PDL at open. Only in case prices break PDL decisively, i might look for a short trade but right entry point matters a lot here. Where prices are accepting is very important today. Also, PDL is very important level from higher timeframe perspective also.
- Short trades are risky if prices trade above 33000.
- No long trade if prices trade below POC. .
- Also, watch out for strength/weakness in Nifty.
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.