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 Thursday, Banknifty opened with a gap down below PDL and sellers were not able to even test poor low on downside and responsive buying moved the prices back inside previous day range. Thereafter, prices moved one time framing upside and tested PDH forming a trend day on upside. Now with this strength of buyers, there is a confusion in Banknifty as to what prices are trying to do. On higher timeframe, we are trending down but there are sharp rallies in lower timeframes, so it will be difficult to trade unless this confusion clears out. For today, we need to see if buyers are able to give a follow through on upside and close selling gap above PDH in banknifty or not. One more point to note is, Nifty is relatively weaker than Banknifty.
What can be expected now:
We need to see today the levels where prices are getting accepted in Banknfty. Prices accepting inside previous day’s range might lead to a complete sideways movement in Banknifty and it will be better to stay out of Banknifty in that case.
PDH (31820) , PDL (30592) are the levels to look out for from previous day’s range. Also, inside previous day’s range, single print level (31180) and buying tail (30760) will provide buying support. Above PDH , we can try to close the gap at 32000 and above that , we can test virgin POC at 32150. Below PDL, we can test poor low at 30450 and below that, 30000 levels. Also, in case if rejection above PDH or rejection below PDL, we can see prices moving sideways.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and there is no clarity at open auction. We need to wait to see where prices are getting accepted or rejected. I will probably wait for IB range completion to decide on a trade but in case of no clarity, I will probably stay out of markets for today.
- Short trades are risky if prices above PDH.
- No long trade if prices trade below PDL.
- Strength or weakness of Nifty becomes very important for Banknifty today. For taking a trade in either direction, we just need to make sure Nifty price action is also supporting the trade.
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.