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, Banknifty opened just above previous day’s range and we were watching for buyers to give follow through on upside as expected , but they failed. Responsive selling took prices back inside previous day’s range but was not able to test POC levels and buyers provided support and pushed prices back above PDH after which prices only moved near PDH for a very long time. Now, we were having a bullish view as long as prices trades above 34150 and for the entire day prices traded above 34150, so this warning would have prevented any short trades. Now, there was a last hour up move in Banknifty and BNF has formed a NVD up day which gives us a hint that bulls are still in control but as we are close to all time highs in Nifty, some volatility is expected as many timeframes would be involved.
What can be expected now:
Today again, we need to see if bulls are able to follow through to the upside above PDH or not. Then only we can assume that Banknifty is still in control of bulls and prices can move further up. We would be having a bullish view only if price trades above PDH. In case prices fail to accept above PDH, I would be having a sideways to slight bearish view but I might skip any short trades due to expected volatility.
PDH (35350) , POC (34910) and PDL (34550) are the levels to watch out from previous day’s range. Above PDH, we can test weak high at 34495 and acceptance above that can take Banknifty much higher to even test virgin POC at 36325 . Below PDL , we can go back to test virgin POC (34150) and that level of 34150 is very important for higher timeframe bulls also and due to this, we might see a support coming there. Below virgin POC (34150) , bulls would be in trouble.
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 but we need to be careful, so we can opt for less position size or opt to wait a little more. Also, till price trades above PDL levels, I will look for long trades only. No shorting if price trades above PDL or infact no short trades if price trades above yesterday’s POC (virgin POC at 34150).
- Short trades are risky if prices trade above virgin POC (34150)
- Long trades are risky if prices trade below virgin POC (34150)
- We have a breakout on Friday, and a small follow through on Monday. 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.