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, Nifty opened above previous day’s range with a big gap up and the buyers tried to move prices up in the start with open-low formation. Now, the gap does not hold that much conviction as this was the first day of new series (June Series). The Buyers , after the initial strength displaying initiative buying, were not able to move prices futher up and then, sellers tried to take advantage of bulls exhaustion and tried to take prices down. But they also faced a rejection below IB low and prices ended up sideways forming a non-trend day. Now, this non-trend day near the all time high creates confusion and as of now no one – bulls or bears, seems to be having control or conviction to move prices. So, unless we see a big buying or big selling day throwing the other party out of competition, this confusion is likely to continue.
What can be expected now:
We need to see the trade faciliation by both buyers and sellers now and probably wait for clarity on control which will come with a big move – either upside or downside. But until then, this struggle might continue. On higher timeframe, still bulls have slight advantage as value area is moving up continuously , but this type of poor trade facilitation by bulls is a caution and might not continue for long.
PDH and PDL are important levels from previous day’s range. We can look for price acceptance beyond this range or price rejection beyond this range to initiate a directional trade but if the trade facilitation is poor, any trades in any direction would be risky.
Trade plan for today:
Nifty is expected to open inside previous day’s range and there is no clarity at open auction. So, I am in no any hurry to take trade today. So, I will wait for a clear price acceptance or price rejection beyond previous day’s range and may be wait for IB range to complete.
- Short trades are risky if prices trade above PDH.
- Long trades are risky if prices trade below PDL.
- Today is an important day in nifty as we are near all time high and trade faciliation is poor, so we need to observe which side a big move happens which will give us clue for breakout or no breakout.
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.