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 Thursday, Banknifty ppened above previous day’s range with a gap up and buyers tried to push prices up in the start and tested poor high on upside. After this, higher timeframe sellers entered and pushed the prices back inside previous day’s range and also below IB Low but they could not push prices further down and prices were support by buyers at the single print buying zone from the previous day. Thereafter, prices ended up consolidating near PDH giving a typical expiry case where option writers eat up all premiums. As, this was the last day of April futures as it was expiry, nothing much can be said about the sellers who pushed the prices down yesterday. They could be higher timeframe or Big option writers. or this might just be an inventory adjustment break. So, the price action today will give us more clarity on the type of sellers we encountered yesterday and we can plan our next moves accordingly.
What can be expected now:
Today start of new series – May 2021 series. So, the levels from previous day will not matter much. but what we can observe that if sellers are able to give follow through and push prices below PDL or not. This will give us some clarity about sellers. As of now, since value area has moved higher, shorts would be risky in case there is price acceptance inside or above previous day’s range.
PDH, POC and PDL are the levels to out from previous day’s range. These will not be exact levels for today because of change in series. Above POC , we are bullish on higher timeframe also and below PDL, the pullback can continue a little more deep.
Trade plan for today:
Banknifty is expected to open inside previous day’s range near PDL and since this is new series, I will wait at least for IB range completion to decide on further trades. Also, prices are expected to be volatile at open due to position adjustments and lot of participation in new series. Overall, I will be looking for a long trade if prices stay above POC and tries to move upside otherwise i will probably ignore trades in Banknifty as Banknifty is relatively stronger than Nifty.
- Short trades are risky if prices above POC.
- No long trade if prices trade below PDL.
- Banknifty and Nifty both have moved up and both have encountered levels form where higher timeframe sellers can enter. What we need to see now is how strong those sellers are and whether buyers can overcome that selling and move further up.
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.