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 Friday, Nifty opened above previous day’s range with a small gap up and buyers tried to push prices up in start but tested Virgin POC levels where there was a resistance. But then sellers were not even able to push prices back inside previous day’s range and Nifty continued sideways move above PDH for the entire day forming a non-trend day. Now, since this sideways move was above PDH, this can be considered as Absorption of Demand and it will be confirmed only if buyers give a follow through to upside in next few days. Also, the Value area is moved up, but these buying seems to be from higher timeframe and its somewhat difficult to trade long in intraday unless shorter timeframes also start supporting the long moves. This is because of higher room for retracements which higher timeframes have in their positions, so they are never in hurry.
What can be expected now:
The price action last day was bullish as it was above PDH and value area also moved up but this was also sluggish and hence we need to see if buyers are able to give a follow through on upside and sustain, which means if we get upside move, we should also get acceptance above and not rejections due to other timeframe sellers overcoming the buying. Acceptance above PDH is good for buyers and acceptance below PDH is not good for buyers.
PDH (14910) and PDL (14785) are the levels to watch out from previous day’s range. Above PDH, we can test poor high at 15035 and this level is also very important from price action perspective as we can expect supply at this level. Below PDL , virgin POC at 14725 and 14630 will form a support but accepting below PDH itself is not good for buyers.
Trade plan for today:
Nifty is expected to open above PDH with a gap up and there is no point looking for a long trade immediately at open becasue risk will be high but 15035 is the level to wtch out for, Acceptance above this level can give a further upside move and rejection above this level can give a sideways move but the thing for watch here is whether we are accepting above previous day’s range. In case we are, we can look for long trade opportunities. Only in case , we come back inside previous day’s range, we can look for short trade as we can then assume that bulls got the chance but they are not interested, so turn of bears.
- Short trades are risky if prices trade above PDH.
- No long trade if prices trade below PDH.
- Nifty is stronger than Banknifty, so Banknifty needs to support Nifty for any good up move.
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.