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 Thursday, Banknifty opened inside previous day’s range and sellers were expected to give a follow through to downside but they failed. After a consolidation near the HVN, Banknifty moved up in the end forming a NVD up day. Now, it looks like sellers are no more interested and inventory adjustment break is over but yesterday was also expiry, so nothing much can be said about this up move. Also, there was poor trade facilitation in this up move which is cause of concern. So, I will be cautious on bullish side unless we cross all time high and accept above it. And, in case the correction is over , prices should be able to trade above PDH and all time high, otherwise we need to be cautious on longs.
What can be expected now:
Right now there is not much clarity, so we need to observe price action today. I will be comfortable with longs only we we accept decisively above PDH, otherwise we can move sideways to downside again
PDH and PDL are important levels from previous day’s range. I am bullish only if prices accept above PDH otherwise not.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and there is not much clarity at open auction. But, I am bullish if prices trade above PDH and will have sideways to bearish view 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 has broken down from consolidation range a day back and it is still down from that range. Today is important to see if sellers are able to push prices further down or not.
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.