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 inside previous day’s range near POC and although sellers tried take prices down in the start, they were not able to even test PDL and buyers pushed the prices up. After IB range formation, responsive sellers again tried to take prices down but this time , they were not able to even test IB low which represents sellers were weak or from smaller time frame and taking advantage of this weakness, buyers pushed the prices higher towards the end forming a NVD day on upside. This entire price action happened inside previous day’s range, so from a higher timeframe perspective ,this can be seen as sideways move. Banknifty was stronger than Nifty in sense that it tested the gap down region but until prices start trading above the Gap in both Nifty and Banknifty, I will be very careful with my long trades.
What can be expected now:
On daily charts, we are moving down but there was some strength Intraday on Tuesday. So, this struggle between buyers and sellers is expected to continue but until prices start trading above GAP (14810 levels), I will not be very comfortable taking a long trade (even if I take a long trade, I will be cautious). Today is expiry, so prices can stay sideways today or for some days will short timeframe buyers are exhausted and thereafter we can see another move down. But, in case we start accepting above 14810, this theory will not be valid.
PDH (14562) and PDL (14300) are the levels to look out for from previous day’s range. Above PDH , we can test 14690-14810 GAP zone and below PDL , swing low 14260 is crucial, but if prices test swing low, they are more likely to go down further.
Trade plan for today:
Nifty is expected to open above PDH and I do not have any clarity on open auction. There can be a one sided move at the open itself but in which direction is not sure and since today is expiry, there can be a struggle from start itself. So, instead of immediately taking an open auction trade, I will wait for some time and observe the open levels and price action. If nothig is clear, I will wait for IB range formation. In case prices trade inside PDH, i will be looking more towards the short trade.
- Short trades are risky if prices above PDH (14560).
- No long trade if prices trade below POC (14380).
- Only in case price accept below swing low (14260), we can see a good downmove, else we might have a sideways day.
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.