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 inside previous day’s range and sellers tried to push prices below PDL in the start but buyers were able to provide support in the start near PDL. Price moved sideways near PDL for most part of the day before breaking down below PDL and IB low and forming a NVD down day. Now, usually this sideways move near PDL demonstrates abosrobtion of demand, so we need to see if this is true and sellers are taking control now. For this, sellers should push the prices below PDL today and give follow through to downside. Only concern is that yesterday was weekly expiry and the down move can be just an expiry play by big players, so in case prices fail to follow through downside and start accepting above POC (33720) levels, we can probably assume the sellers were from lower timframe and we can resume upmove again today. So , price action at POC (33720) levels is critical.
What can be expected now:
Today is important day from price action perspective as price was retracing for the last three days after a big upmove on Monday and a gap up on Tuesday. Today , we need to see if these buyers who took the prices up are able to provide support or not. Also, on intraday prespective, POC (33720) is an important level to watchout for and we need to observe if price is accepting above or below POC levels. From higher timeframe perspective, whether we close above or below POC levels in important.
PDH (33900) , POC (33720) and PDL (33385) are the levels to watch out from previous day’s range. Above PDH, we can test weak high (34030) and poor high (34240) and below PDL, we can test the trend day VWAP levels at 33100. Acceptance below VWAP levels in not good for buyers in the higher timeframe also.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and there is not much clarity at open auction. So, i will wait and watch the price action probably till IB completion and then decide on the direction based on whether the prices are accepting above or below POC levels. In case of volatility and no clear direction, i might choose not to take any trades today.
- Short trades are risky if prices trade above POC – 33720.
- Long trades are risky if prices trade below POC – 33720.
- Today is an important day from price action perspective like a do or die day for bulls, so lets see if bulls are able to provide support.
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.