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 buyers immediately took prices nabove PDH from open itself with an open low. After the initial move, there was some consolidation near poor highs which was absorption of supply as Banknifty broke out later on the upside and closed above the swing highs. So, this marks the end of retracement (pullback) and the uptrend in Banknifty resumes on higher timeframe. Also, the area of selling absorption is POC today (34150) and it is very important. Price trading above POC (34150) is bullish and can give a potential move upside. Prices trading below POC (34150) would mean Banknifty can again turn to sideways zone on higher timeframe. `
What can be expected now:
Today, we need to see if bulls are able to follow through to the upside above PDH or now. The follow through at open auction above PDH can take prices to test weak high levels of 35500. Also, till we trade below POC levels , there is not point shorting the prices as we can expect buying anytime. Only if prices trade below POC, we can look for a short trade otherwise not.
PDH (34865) , POC (34150) and PDL (33580) are the levels to watch out from previous day’s range. Above PDH, we can test weak high at 35500. Below PDL , we can go back to test swing low at 33390, but after such a big move on Friday, its unlikely that we will test below PDL, but then anything can happen.
Trade plan for today:
Banknifty is expected to near PDH and I would look for price auction at PDH to take a long trade. In case there is OTD up at PDH, I will look for a long trade. Also, till price trades above POC levels, I will look for long trades only. No shorting if price trades above POC.
- Short trades are risky if prices trade above POC (34150)
- Long trades are risky if prices trade below POC (34150)
- We have a breakout on Friday, so today we need to see if there is a follow through and breakout sustains.
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.