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 Tuesday, Nifty opened just above previous day’s range and we were expecting buyers to give follow through on upside, but they again failed and prices moved sideways above PDH for sometime and formed a small IB. Though it looked like buyers are absorbing supply, it actually turned out to be buyer’s exhaustion as sellers took the prices back inside previous day’s range and almost tested the area near PDL. But the price is still above 15100 levels and until price is trading above these levels, the higher timeframe buyers would be still in control. But then, there are also shorter timeframe sellers dominating and we need to see if the sellers are able to move the prices down today by giving a follow through below PDL or not. Also, it does not look like higher timeframe buyers want to move market up, so if they keep on supporting the prices , we might end up moving sideways between 15100 and 15300 levels.
What can be expected now:
Today , we need to see whether the sellers who market the prices down yesterday in the second half are able to follow through to downside or not. Acceptance below 15100 levels will not be good for bulls and price tradiung inside previous day’s range will not be good for bears. But, we will not have a definate clarity unless prices starts trading and accepting beyond 15100-15300 zone.
PDH (15300) and PDL (15160) are the levels to watch out from previous day’s range. Above PDH, we can test swing high at 15375 and all time high (15430). Below PDL , we can go back to test virgin POC of 15100 and 15100 level is very important for higher timeframes also and we might see a support coming there. Below 15100, bulls would be in trouble.
Trade plan for today:
Nifty is expected to open inside previous day’s range and i have no clarity in open auction, So , i will stay out. Also, I will probably stay out of market till prices trade in 15100-15300 range unless i get a very good opportunity. I will look for long trades only above 15300 and short trades only below 15100.
- Short trades are risky if prices trade above PDH (15300)
- Long trades are risky if prices trade below virgin POC (15100)
- There are good chances of price trading sideways if prices keep accepting in 15100-15300 zone.
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.