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 inside previous day’s range and there was a buying support at POC. The buyers took the prices up above PDH and as expected above PDH, we tested the virgin POC level. Responsive selling at virgin POC overcame buying pressure and prices came back inside previous day’s range but could not test IB low, thus forming a NVD upside day. The value area in Banknifty has moved up and Banknifty is showing bullishness but the reponsive selling in Friday second half was cause of concern for bulls. So, we need to observe if the reponsive selling continues and take prices below PDL or sellers fail and prices move back above PDH. Prices accepting above PDH is bullish, prices accepting below PDL is bearish and prices accepting inside previous day’s range is confusing but with slightly bullish bias.
What can be expected now:
We need to see today the levels where prices are getting accepted in Banknfty. Prices accepting above PDH will be bullish and prices accepting below PDL will be bearish. Prices accepting inside previous day’s range in Banknifty is not good for sellers but still there will not be much clarity in this case.
PDH (32170) , PDL (31375) are the levels to look out for from previous day’s range. Above PDH, prices can test swing high levels of 32435 and below PDL, there is little support at 31230 (single print buying) and below it, prices can test swing low of 30450.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and there is no clarity at open auction. Also, we can see volatile moves in banknifty at open , so better to wait for some time to get clarity. What we need to wait to observe is where prices are getting accepted or rejected. In case prices are not accepted beyond previous day’s range, I will wait for IB range completion to decide on a trade.
- 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. Banknifty is strong and NIfty is weak, So for Banknifty to move further up, Nifty also should be accepting above PDH. otherwise, weakness in Nifty can also drag down Banknifty.
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.