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, Nifty opened inside previous day’s range and tested HVN from the previous big downtrend day. Thereafter, buyers pushed the prices up and for the complete day the prices move with a slight upward bias at the LVN of the previous day forming a NVD up day but all price action was inside previous day’s range and the day was also an inside 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 (15765) and PDL (15655) are important levels from previous day’s range. I am bullish only if prices accept above PDH otherwise not.
Trade plan for today:
Nifty is expected to open inside previous day’s range and we need to see if prices are accepting above PDH or not . That is if bulls are able to give a follow through upside or not. The trade facilitation by bulls was not good yesterday which is not the case after a big inventory adjustment break and this is the reason I am cautious. But acceptance above PDH can give us short covering and we might move up and make new highs but if that does not happen, we need to be cautious.
- Short trades are risky if prices trade above PDH (15765).
- Long trades are risky if prices trade below PDH (15765).
- Banknifty showed some support yesterday, so we need to see if Banknifty continues moving up or not. If case of any further weakness in Banknifty, we need to be cautious on Nifty long trades.
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.