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 Wednesday, Nifty opened above PDH with a gap up and sellers were not able to eventest PDH thus leaving a buying gap. Nifty moved up and after some consolidation near IB high broke on the upside forming a trend day on upside. This was what we had expected in the previous analysis also in case prices accept above PDH. Also, the sellers gap above 14810 ws filled and there is no more selling gap left above PDH. With the price action yesterday, we have moved above swing high, so a downtrend is no more valid. Now, we can either move up or sideways on higher timeframe.
What can be expected now:
Today, we need to see if buyers are able to follow through to upside or not. Prices accepting above PDH is good for buyers but today is also monthly expiry, so we need to be careful with volatility and our trade. There is no point looking for a short trade unless we see a very clear entry of higher timeframe bears.
PDH and PDL are the levels to look out for from previous day’s range. Above PDH , prices can test poor high at 15045 and below PDL we can test virgin POC levels at 14585.
Trade plan for today:
Nifty is expected to open above previous day’s range with a gap up and since this gap is expected to be big, there is not much clarity at open auction. Also, today is expiry, so we need to be careful with our trades and plan only when there is good clarity. I will probably wait for soemtime and see price acceptance or rejections to plan my trade later. Also, no short trades if prices are accepted above PDH.
- Short trades are risky if prices above PDH
- No long trade if prices trade below PDL.
- As expected, both Banknifty and Nifty are moving up together, so if this continues, Long trades would be a good idea, but be careful if any of these indices show weakness.
- Today is monthly expiry, os be ware of option writers game.
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.