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, Nifty opened above previous day’s range and sellers pushed the prices back inside previous day’s range at open itself forming Open-High. But they were only able to test area near POC from where buyers pushes the prices above Open-high and after consolidating for some time near PDH, the prices rose higher to close as NVD up day. The value area has moved up which again means that higher timeframe bulls are in control and are driving prices higher and this can continue till they are opposed by higher timeframe sellers. In lower timeframe, bulls and bears seem to be in equilibrium and that is why we see poor trade faciliation with respect to Intraday. This is also likely to continue unless one of the sides gives up. But unless, we have clarity and some confirmation, it is better to look for long trades rather than short trades (same from last few days).
What can be expected now:
As of now, we are expecting same thing to continue, that is prices to continue up but with a lot of struggle as it looks like only higher timeframes are driving prices higher. There is no reason to be bearish until we keep forming higher value areas. We will get our caution when it comes. But trading is going to be difficult because of these poor trade facilitation.
PDH , POC and PDL are important levels from previous day’s range. I am bullish above POC and will only be bearish below PDL. Above PDH is no man’s land means we will make a new high, so nothing much can be said about that area except that if we continue accepting higher prices, we will keep moving higher. Acceptance below POC is not good for buyers for shorter timeframe and we might test PDL in that case.
Trade plan for today:
Nifty is expected to open inside previous day’s range near PDH and there is not much clarity at open auction. I am bullish if prices trade above POC, so, I will probably look out for only long trades in that case. 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.
- 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.