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 below previous day’s range with a Big Gap Down and immediately responsive buyers pitched in and took price up to test PDL. This was same as Nifty, so its going to be same analysis in Banknifty as well. One more thing to Note however is that we tested the rejection zone of Monday and its not good if we are revisiting that zone again. This means that the strong rejection we saw from the lows on Monday is not strong and therefore, we have good chances of breaking that low and moving down further till a strong rejection on lower prices happens in Banknifty. Banknifty formed NVD down with lower value area and we are expected to move down in banknifty but there can be short upswing ( trading down move is never easy).
What can be expected now:
Similar to Nifty, we might see a down swing in Banknifty but I am expecting area near 34000 to price support to Banknifty in coming days. But for shorter timeframe, till we keep accepting below previous day’s range, we need to only look for short trades.
PDH (34967) , POC (34860) and PDL (34485) are important levels from previous day’s range. Acceptance above PDH can see prices testing virgin POC at 35125 and acceptance above that is not good for sellers. Price acceptance below PDL, can take prices down to test virgin POC at 34150.
Trade plan for today:
I am having sideways to Bearish view in Banknifty till prices keep trading below 35125, So I will not be looking for any long trades until prices move above this level. Banknifty is expected to open inside previous day’s range and there is not much clarity at open auction. I will wait for a good rejection of some levels (or may be wait for IB range completion) to take a short trade. In case I do not get a good shorting opportunity , I will probably stay out of trades today.
- Short trades are risky if prices trade above PDH.
- Long trades are risky if prices trade below PDH.
- The value area in Banknifty is moving down, so until that changes, be cautious about long trades.
- In case you are in short trade, beware of sellers exhaustion, there can be sharp up spikes due to shorter timeframe short covering, so keep that in mind.
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.