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, Banknifty opened inside previous day’s range and there was some volatility due to RBI event where banknifty tested PDL but there was immediately strong responsive buying from there. Banknifty then traded inside previous day’s range and formed a NVD up but mostly it was like a non-trend day. So, we need to see if the buying was strong enough to protect the lows from yesterday and push prices up. But in case, they are unable to push prices up and accept above PDH, the confusion will continue and banknifty is likely to trade inside previous day’s range with no clarity.
What can be expected now:
The price action yesterday was as expected and unless we break above or below previous day’s range decisively (please note decisively), then only 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 (33060) and PDL (32135) are the levels to watch out from previous day’s range. Above PDH, we can test poor high at 33600 and above that weak high at 34290. Below PDL , we can test weak low at 31400 but testing weak low will not be good for bulls and we can fall further.
Trade plan for today:
Banknifty is expected to open near PDH and we need to see if buyers are able to push market up at open. Only in case of clear acceptance above PDH , we can expect an upside move today, but in case prices come back inside previous day’s range, then sideways or down day can be possible. Also note that, today is weekly expiry, so a complete sideways day cannot be ruled out. So, I will look for long trade only above PDH and will ignore any other open auction trades, Later, I will see where IB range is forming, in case I feel there will be sideways move again, I will 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 for now, so if Nifty is supporting, a long trade in banknifty is a good trade.
- Be cautious of any exhaustion as today is expiry and exhaustion might lead to volatility.
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.