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, Nifty opened near PDH and buyers pushed the prices above PDH and tested the gap that was formed this week with the breakdown of Nifty. The higher timeframe sellers were expected to defend this gap and they did and Nifty moved sideways forming a non-trend day and cloing at the open. Now, If we look at daily charts, this upmove in last 3 days can be seen and inventory adjustment in the down market and we will confirm it only when it start moving down and breaks the swing low of 14260. Also, this idea is no more valid if prices scale above PDH and gets accepted there.
What can be expected now:
We can expect a down move if prices accept below PDL. Once prices are below PDL, they should not come back inside previous day’s range. Acceptance above PDH is not good for sellers and although there migth be a struggle in moving prices up above PDH, any acceptance above PDH is not good for buyers. Similarly, we need to see the price action below PDL also if buyers are able to defend the down move or not. Price trading inside previous day’s range is also positive for buyers.
PDH and PDL are the levels to look out for from previous day’s range. Above PDH , we can try to close the gap by testing 14810 and below PDL , we might drift dow to swing low of 14260.
Trade plan for today:
Nifty is expected to open below PDL with a Gap down and open auction will be volatile due to this gap down, so no trades at open auction. As said above, If price accepted below PDL, I will be looking for short trades later. Only if there is a clear exhaution, I might look for any long trade but the chances are very less. In fact, I will try to avoid any longs if prices aceept below PDL.
- Short trades are risky if prices above PDL..
- No long trade if prices trade below PDL.
- Friday’s high can form a swing high, so until it holds up, we can think or short trade but if it does not hold up, then no opoint looking for shorts.
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.