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 near PDH and tried to break above PDH but failed. It then consolidated near PDH in the first half but buyers were unable to take prices above IB high and in the second half, sellers took control and pushed price below IB low and also below POC ending with a NVD down day which was inside previous day’s range. Now, we were expecting sellers to push prices down in start yesterday which did not happened and then buyers also were unable to push prices upwards taking advantage of sellers exhaustion in start. So, there is confusion and no clarity right now unless we trade decisively above PDH or below PDL. Any price action inside previous day’s range would indicate uncertainity and trading would be risky due to volatility.
What can be expected now:
The price action yesterday was not normal ones, so we need to be cautious today. The acceptance inside previous day’s range will not give any clarity. Only if we break above or below previous day’s range decisively (please note decisively), then we can form an opinion in that direction, but until then, i will probably stay out and just observe what Market is trying to do.
PDH , PDL are the levels to watch out from previous day’s range. Also, yesterday’s POC levels of 14600 still holds significance today. Above PDH, we can test virgin POC at 14825 and above that next virgin POC which is also weak high. Below PDL, we can test swing low levels but price acceptance below PDL can give a good downside move.
Trade plan for today:
Nifty is expected to open inside previous day’s range and there is no clarity at open auction. Also, till prices trade inside previous day’s range, the struggle between bulls and bears is expected to continue and I will stay out of that fight. I will look for trades only if prices are clearly accepted above PDH or below PDL, otherwise I will probably stay out of Market.
- Short trades are risky if prices trade above PDH.
- No long trade if prices trade below PDL.
- Banknifty is stronger than nifty now, so again both indices are showing some different signs and this is time to be cautious.
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.