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 Monday, Banknifty opened inside previous day’s range and sellers tried to take Banknifty down but there was support and POC and prices moved up. Again, there was a lot of selling pressure withnessed in Banknifty once it tried to break IB high and due to which Banknifty ended with a small range non-trend day., which is also Inside day but it has not much significance and we are moving sideways in Banknifty for quite soemtime. So, in Banknifty , nothing is clear for now. Also, Nifty is moving higher in daily charts but Banknifty is not supporting this upmove. This struggle between buyers and sellers is likely to continue until one of them – bulls or bears, give up.
What can be expected now:
IN Banknifty, there is no clarity and we have to wait and watch for a clear directional trend emerging in Banknifty, which will come with a good breakout or breakdown beyond this consolidation zone. Until that happens, we can only observe and it is better to keep out of Banknifty.
PDH 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, so we need to be cautious.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and there is not much clarity at open auction. I am bullish if prices trade above PDH. so, I will probably look out for only long trades in that case, but in case trade facilitation is poor, I will be cautious and can also choose to stay out. I am not in favour of shorting unless I good a very very good opportunity.
- Short trades are risky if prices trade above PDL.
- 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 at 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.