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 Tuesday, Nifty opened inside previous day’s range and test POC where buyers supported the prices and then there was almost one timeframing entire day to upside taking prices above PDH and forming a NVD up day. This was what we had expected in case prices are accepted above PDL (check previous day’s post). The value area moved higher and now the control is on the buyer side but we have another set of sellers which might prevent 14800 levels. So, we need to observe how prices behave today but till they are accepted above PDH, there is no point taking a short trade and we need to look for long trades.
What can be expected now:
We need to see if buyers are able to follow through to upside or not. Prices accepting above PDH is good for buyers. Only thing we need to observe today is any exhaustion of buyers as there can be an inventory adjustment break in that case. Until the prices are above POC (14580) levels, the control is with buyers.
PDH (14658) , POC (14580) and PDL (14476) are the levels to look out for from previous day’s range. Above PDH , prices might first test swing high at 14730 and above that it can test 14810 to close the seller’s gap. Accpetance below PDL can take prices to virgin poc levels of 14375.
Trade plan for today:
Nifty is expected to open above previous day’s range and I will opt for a long trade in case of OTD up at PDH, otherwise I will wait for some time and see if prices are accepting abover PDH or not. In case, I do not have opportunity at open, I will wait for IB formation to take a trade. Also, till prices trade above POC, I will not look for any short trade.
- Short trades are risky if prices above POC.
- No long trade if prices trade below PDL.
- Banknifty and Nifty both have started moving up, so if this continues, Long trades would be a good idea, but be careful if any of these indices show weakness.
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.