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 near PDH and buyers tried to push the prices above PDH but failed and sellers were also not able to push prices much down, So entire day ended up as a struggle between buyers and sellers around PDH forming a non-trend day. Now Friday’s struggle was after two days of strength in banknifty , so it becomes an important reference and we need to see if the treand changes from here or not, thats is if the PDH becomes swing high and down move starts from here or not.
What can be expected now:
The prices accepting below PDL is not good for buyers and we can then assume the price will start to move down in that case. But , any price acceptanc above PDH in not good for long term sellers and there is no point looking for any short trade if prices are trading above PDH.
PDH and PDL are the levels to look out for from previous day’s range. Above PDH, we can expect prices to test virgin POC levels but above PDH, the buyers will be clearly in control. Below PDL, we can expect prices to test poor low around 31400 and virgin POC below that.
Trade plan for today:
Banknifty is expected to open below PDL with a gap down and is expected to be volatile and give a big move in one or both directions. So, I will probably avoid any open auction trades. Once price settles, I will look at the levels where prices are settling and look out for a trade in that direction only.
- Short trades are risky if prices trade above PDL.
- No long trade if prices trade below PDL.
- Also, watch out for strength/weakness in Nifty. If PDH is protected in Both Nifty and Banknifty, till the time that level is protected , we can assume Sellers are active and want to take control back from buyers.
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.