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 opened near PDH (previous day’s high) and buyers tried to push prices up in start but failed. Then responsive sellers tried to push prices down but thee were able to test POC levels from where buyers pushed prices back above IB low and Banknifty ended as a sideways non-trend day. Only good thing for buyers is that the POC has moved up otherwise , it was a complete inside non-trend day. So, we can expect a breakout in banknifty and yesterday can be seen as absorption of supply in the last 3 days sideways move. The prices have been moving mostly sideways in last 3 days, so , in case we see buyers’s exhaustion, there can be a quick inventory adjustment break to test PDL before we move up. Also, clear acceptance below PDL negates this bullish view.
What can be expected now:
The price action yesterday was slightly bullish but with a lot of struggle which might be due to expiry. So, in case it was due to expiry, we should see a good move upside. Therefore I am bullish on Banknifty till prices continue to trade above PDL and will only turn bearish only in case of a clear acceptance below PDL but even then i will most likely avoid short trades today.
PDH (33140) and PDL (32650) are the levels to watch out from previous day’s range. Above PDH, we can test poor high at 33600. Below PDL , in case we start accepting, the prices can fall huge.
Trade plan for today:
Banknifty is expected to open above PDH with a gap up and I will wait for sometime to observe where prices are getting accepted in Banknifty. I will look for a long trade only in case prices trade above PDH, otherwise I will wait for IB range formation observing the same thing, but even if prices trade inside previous day’s range, I have a bullish view till they keep accepting above PDL . But, the bulls have been seen struggling from last few days, so we need to be very cautious if they keep struggling today also.
- Short trades are risky if prices trade above PDL.
- No long trade if prices trade below PDL.
- Banknifty should give a good move upside today but in case it does not, we need to be cautious about the intention of bulls.
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.