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 inside previous day’s range and after initial struggle, buyers took prices above previous day’s range. Above PDH, they tested the virgin POC levels and from there, responsive selling pushed the prices back inside previous day’s range. The prices also went below IB low and closed near it forming a Neutral center day. Now, Neutral center day demonstrates less conviction from both Buyers and Sellers, therefore we need to be cautious and can see this struggle continuing until prices clearly accepts beyond previous day’s range. For short term, prices accepting above PDH would be sign of Buyers victory and we can see further upside and prices accepting below PDL will be sign of Sellers victory. Prices accepting inside previous day’s range has no clarity and we can have a possible sideways move.
What can be expected now:
At open, we need to see if Sellers are above to give a follow through to downside or they are just exhausted. Also, prices will not be in control of buyers until they move it above PDH, But in case buyers are not able to even test PDH, sellers will have the advantage. Any acceptance above PDH will push prices further up and any acceptance below PDL will push prices further down. Within previous day’s range, VWAP level (14365) is important. Price trading above VWAP is bullish and prices trading below VWAP (14365) is bearish but we need to take extra caution in case of any trades inside previous day’s range.
PDH (14470) , VWAP (14365)and PDL (14265) are the levels to look out for from previous day’s range. Above PDH , prices might test the gap zone 14535-14580 and below PDL, prices can test swing low (14155).
Trade plan for today:
Nifty is expected to open inside previous day’s range near PDH and we need to observe if prices breaks PDH and are accepted above PDH. In case, prices are accepted above PDH, we can plan for a long trade otherwise there will not be much clarity. I will not be looking for any short trade until prices starts accepting below VWAP levels of 14365. So, I would be looking for long trades above PDH, short trades below VWAP and no trades between PDH and VWAP.
- Short trades are risky if prices above PDH.
- No long trade if prices trade below VWAP, this would indicate buyers are weak and we might go below PDL.
- Banknifty is relatively stronger than Nifty, so for Nifty to move in any direction, Banknifty should be supporting.
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.