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, Nifty opened inside previous day’s range at POC and sellers tried to drive prices lower but failed to even test PDL. After the first 30 minutes or selling, resposive buyers pitched in and took prices up above PDH and prices consolidated near PDH for rest of the day. Now, we were looking yesterday if sellers are able to take prices below PDL in which they clearly failed. Also, the buyers are buying the lower prices created by short timeframe sellers and not taking prices further up, so there is only responsive buying in the market right not and no initiative buying. This means that both the higher timeframe buyer and higher timeframe sellers are absent and no participating. If that is the case, we need to wait till we have an indication of one of them driving the price initiatively, other wise till that happen, we will move mostly sideways in same way we have been doing for last three days with a slight upward bias. ON higher timeframe, this sideways move can also be seen as buildup but in case buildup is long, we might have an inventory adjustment break due to exhaustion on higher timeframe also.
What can be expected now:
Today is also expiry. So, we might see this sideways move continuing as a result of less participation from higher timeframes. We might see a good directional move only in case of clear acceptance above PDH or below PDL. Until that happens, prices will move sideways in random fashion and volatility may be low.
PDH (15323) and PDL (15196) 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 test weak low at 15160 and acceptance below 15160 can take prices to 15100. 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. Also, today is expiry, so there are higher chances of price remaining sideways.
- Short trades are risky if prices trade above PDH.
- Long trades are risky if prices trade below virgin PDL.
- There are good chances of price trading sideways due to expiry.
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.