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 Monday, Nifty opened just above PDH and sellers tried to push Nifty back to previous day’s range but failed. After that, initiative buying pushed Nifty on upside with OTD at PDH and then for the rest of the day, Nifty clearly one time-framed on upside, forming a trend day up and closing at the top of the range. As discussed in previous post, we needed this kind of a decisive day to form an opinion on what higher timeframe is trying to do, so Monday was a nice bullish day and the VWAP of this trend day (14850) becomes an important level now. What we need to observe is whether bulls are able to follow through on upside today at open continuing the upwards momentum. But anyway, till the prices accept above the VWAP levels, the buyers would be in control.
What can be expected now:
There was a strong move in both Nifty and Banknifty yesterday. This momentum is likely to continue today, so what we need to observe the trade facilitation by buyers today. In case of any poor trade facilitation by buyers or exhaustions, there might be short inventory adjustment breaks and we need to be cautious about them if we are looking for a long trade.
PDH (14960) , VWAP (14850) and PDL (14745) are the levels to watch out from previous day’s range. Above PDH, we can test weak high at 15025 and acceptance above that can take prices to test poor high at 15080. A nice attempt to defend up move by bears can be at 15200 levels, if prices test those levels. On other hand, prices accepting below VWAP is not good for buyers and in that case , we can test PDL and virgin POC (14680) below that.
Trade plan for today:
Nifty is expected to open above previous day’s range with a gap and I will look for open auction long trades only if gap is small or if prices test PDH. In case of big gap, I will wait and watch. Poor highs at 15025 and 15080 are levels to observe for price action. Its always better to wait for prices to settle down in case of big gap up open before planning a trade. There is no point looking for a short trade if prices are accepted above PDH, similarly no point looking for a long trade below PDH.
- Short trades are risky if prices trade above PDH
- Long trades are risky if prices trade below PDH.
- Banknifty and Nifty have both showed signs of strength and are again in sync which is good sign for 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, Nifty in above statements Indicate Nifty future for current month and not Nifty index.