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 sellers tried to push the prices below PDL but were rejected after a sideways move. This means that for time being, there was a support near the sideways consolidation zone low which was as expected. Today we need to see if this buying can take prices above this sideways consolidation zone or not (breakout or no breakout). Also, today is expiry, so in case we fail to break above consolidation zone, there are higher chances of prices ending up in sideways move.
What can be expected now:
Yesterday, we saw a buying support near lows of sideways consoldation zone which took prices up in the end. So, today we need to observe price action at the upper end of that zone which is the areas between PDH and poor high. Only in case prices break abouve poor high and gets accepted at higher prices, we cna expect a good upmove, otherwise due to weekely expiry, prices might end up moving sideways.
PDH , POC and PDL are important levels from previous day’s range. We can look for price acceptance beyond previous day’s 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:
Banknifty is expected to above previous day’s range and we need to observe trade facilitation beyond previous day’s range. In case trade facilitation is not very clear, I will wait for IB range formation and then decide on a trade on rejection of levels (mean reversion trades) but if there is not much clarity, I will choose to ignore trades in banknifty. But I will not be looking for any short trade unless prices accept below PDL
- Short trades are risky if prices trade above POC
- Long trades are risky if prices trade below PDL
- For any upside move in Nifty also, banknifty has to show relative strength as Nifty is trading near all time high and Banknifty has to catch up.
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.