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, Banknifty opened inside previous day’s range but below POC and prices tried to go up but were rejected from POC. Also, initially, sellers tried to take prices below PDL and encountered a strong reponsive buying below PDL at the start but then later in the day, sellers overcame that buying and market prices lower ending up in NVD down day. The value area was formed lower, so prices are in control of sellers clerarly in Banknifty but only problem for Bears is that Nifty is ch weaker as sellers failed to mark prices down below PDL in case of Nifty. So , there is a clear discrepency between the two major indices and till that continues, trading any direction would be risky. So, we need to probably wait on sidelines until we get a very good opportunity or till the time, both indices get into sync.
What can be expected now:
There is not much clarity as of now but price trading above PDH is good for Buyers and price trading below PDL is good for sellers. Also, prices trading within previous day’s range has no clarity and we might see sideways movement till one side gains an upper hand. Also, we might see Banknifty drifting down again if there is no support from buyers.
PDH (32700) , POC (32400) and PDL (32135) are the levels to watch out from previous day’s range. Above PDH, we can test virgin POC (32950) and weak high (33290) and below PDL , we can test weak low levels at 32100 .
Trade plan for today:
Banknifty is expected to open inside previous day’s range and there is no clarity at open. So I will wait for IB range formation and based on IB range placement, I will look for trades later. But as I said, we need to be cautious about our trades now and if we do not get a good opportunity, its better to stay out of Market and wait. As of now, no one – bulls or bears seems to be dominating across the market, so any trades in these type of markets would be more risky.
- Short trades are risky if prices trade above POC
- Long trades are risky if prices trade below POC.
- Banknifty and Nifty are both weak now, but banknifty is weaker than nifty for quite a long time, so we need to watch out for any signs of strength in banknifty.
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.