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, Banknifty opened with a big gap down testing and closing the buying gap it left in last week, but there was no continuation down after this big a gap. Responsive buying moved prices up to test PDL and HV inside previous day’s range but there was a selling from POC/HVNL and prices closed back inside IB range forming a NVD up day. The value area is formed lower. The buyers and sellers were both active yesterday but none of them were able to demonstrate complete control, so there is no clarity for the moment. PDL becomes very important level today as buyers need to protect that level, In case prices start accepting below PDL, we can see further down move. Also, today is expiry, so I am expecting not so good trade facilitation and option writers trying to keep prices in narrow range.
What can be expected now:
There is not much clarity as of now but price trading above PDL is good for Buyers and price trading below PDL is good for sellers. Also today is expiry, so trade faciliation can be poor due to option writers keeping prices in narrow range but we need to be careful of that and one timeframing or not will be our clue.
PDH (33280) , POC (32950) and PDL (32700) are the levels to watch out from previous day’s range. Above PDH, we can test poor high at 33500 and below PDL , we can test swing low at 32100. Acceptance below PDL is not good for higher timeframe buyers also and only then we need to be cautious on long timeframe buyers.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and we need to see if sellers are ble to take prices below PDL or not. I will be looking for short trades if prices accept below PDL and long trade if price are rejected below PDL or prices are accepted above PDL. Also, today is expiry , we need to be cautious of any poor trade facilitation and also volatility towards the end of the day.
- Short trades are risky if prices trade above PDL.
- No long trade if prices trade below PDL .
- Banknifty and Nifty are both weak now, so we need to see if they move down together or they show some discrepency today.
- Today is weekly expiry, so beware of option writers and also any volatility towards the end.
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.