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 Monday, Banknifty opened above PDH and tested PDH but buyers took the prices up forming OTD (open test drive up day). Usually, OTD up results in a very good upmove but after IB, buyers were not able to push prices beyond IB high. Also, the sellers were not strong enough to push prices back inside previous day’s range, so prices ended up moving sideways forming a Non-trend day. The value area has shifted upwards, so buyers have the advantage but since it was non-trend day, the conviction from the buyers was missing. So, this struggle can continue.
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 and PDL are the levels to look out for from previous day’s range. Above PDH, prices can have a good upsdie movement and below PDL, prices can test virgin POC levels.
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 PDL.
- No long trade if prices trade below PDL.
- Strength or weakness of Nifty becomes very important for Banknifty . Now, both indices have started moving upsdie but Banknifty is still stronger than Nifty and NIfty has to catch up for good upsdie movement.
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.