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, Nifty opened above previous day’s range with a big gap up and buyers tried to push prices up in the start but they could only test a poor high on upside from where higher timeframe sellers entered and pushed the prices back inside previous day’s range and also below IB Low. The sellers then were able to take prices till LVN from where buyers gave support and prices ended moving sideways. This was the last day of April futures and as it was expiry, so nothing much can be said about the sellers who pushed the prices down yesterday. They could be higher timeframe or Big option writers. Or it might just be, that, higher timeframe bulls stopped buying after a big gap open which lead to this 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 is, whether 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 (15035) , POC (14910) and PDL (14815) 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 and below PDL, the pullback can continue a little more deep and next level to watch would be 14655.
Trade plan for today:
Nifty is expected to open inside previous day’s range near PDL or may be below 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 PDL and tries to move upside and I will be bearish if price gets clearly accepted below PDL.
- Short trades are risky if prices above PDL
- 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, Nifty in above statements Indicate Nifty future for current month and not Nifty index.