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 inside previous day’s range and sellers aggresively pushed prices down to test PDL . Responsive buying came below PDL and pushed the prices up but was not able to test PDH and just tested IB high. Now, this looks like buyers are strong and are not lettting markets fall but this price action also tells us about buyer’s exhaustion and over all vulnerability of Market for a sharp correction or Inventory adjustment break. So, I think today will be an important day. If bulls are able to move prices to upside and close above PDH and all time high, then only I will be comfortable trading on the bullish side, but if prices close below PDL, or even if they are not able to trade and accept above PDH, then I would be looking more towards the short side trades expecting a breakdown due to exhaustion of bulls. But, lets first wait and watch what happens today.
What can be expected now:
Till now, prices are in control of higher timeframe bulls and they are buying every small dip but if they cannot move prices higher, it can turn out just to be overload of positions which can result to an inventory adjustment break, where buyers stop supporting the prices and let market correct. But, in case there is a follow through to upside today, then we can neglect this idea of correction and move along with bulls.
PDH and PDL are important levels from previous day’s range. I am bullish only above PDH and will have a sideways to bearish view below PDH. In case, price break below PDL, we can expect and good fall which can test poor low and virgin POC on downside.
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 only if prices trade above PDH, else I would be looking for a short trade opportunity if prices fail to trade above PDH.
- Short trades are risky if prices trade above PDH.
- Long trades are risky if prices trade below PDH.
- 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.