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 above previous day’s range with a small gap up and buyers tried to push prices upside in the start but after first 30 min, sellers entered and pushed prices back inside previous day’s range. Sellers were also not able to push prices further down and prices kept hovering above and below PDH forming a NVD down day near PDH. Now, the value area has moved up, so uptrend is intact and so is the poor trade facilitation by buyers after having only a good trade facilitation on Monday. But, unless we see a day where sellers take complete control, prices can continue moving up even with poor trade faciliation.
What can be expected now:
Unless there is a clear control by buyers or sellers which will happen only when prices accept beyond PDH or PDL, we can see this poor trade faciliation by buyers and prices moving sideways to upside for today also. Looking at the volatility, we can also say that more timeframes are getting involved and therefore trading intraday will not be easy because of these wild swings.
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.
- Banknifty is weaker than Nifty or we can say that Nifty is showing sluggish upmove due to weakness in Banknifty. So, price action in Banknifty becomes important thing to watch for.
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.