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 Wednesday, Banknifty opened inside previous day’s range and in the start itself, sellers tried to take prices down but were not able to even test PDL. After the first 30 minutes of selling, reponsive buyers pitched in and took prices up above IB high but they were also not able to follow through further on upside and prices ended up moving back inside IB rnage forming a NVD up day which was completely inside previous day’s range. This type of sideways move is expected to continue until we have initiative activity either from higher timeframe buyers or higher timeframe sellers. Also, Banknifty is comparatively weaker to Nifty and today is monthly expiry, so If we do not have initative activity today, there are very high chances of another sideways day.
What can be expected now:
Today is monthly expiry and we have been moving sideways for sometime now, so we can expect higher chances of sideways move. Also, as we discussed in last post, we will not have a definate clarity unless prices starts trading and accepting beyond 34150-35400 zone, so till then, its better to wait and watch.
PDH (35000) and PDL (34500) are the levels to watch out from previous day’s range. Above PDH, we can test swing high at 35340 and below PDL , we can go back to test poor low at 34435 and virgin POC of 34150. Below 34150, bulls would be in trouble.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and I have no clarity in open auction, Also, since Nifty is moving up and Banknifty seems to be weaker, I will stay out of Banknifty trades unless we have some clarity, So probably no trades in Banknifty today.
- Short trades are risky if prices trade above PDH (35000)
- Long trades are risky if prices trade below virgin POC (34150)
- Banknifty is weaker than NIfty, so it has to show strength if Nifty has to move up , else we might end moving sideways.
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.