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 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 a high volatile day because of two things: A big gap down and weekly expiry – Deadly combination. Anyway, buyers tried to push prices back inside previous day’s range but failed and sellers took over and moved prices back down below IB low and closed inside IB range forming a Neutral day. The value area shifted down, so we are now in correction as expected. Now, from here on we need to observe two things: Buyers strength and Sellers exhaustion. Till both of them happens, we will continue to move sideways to downside.
What can be expected now:
Yesterday, prices accepted below PDL and this confirmed that we are now in downswing. I am not expecting the correction to be very deep and we might find some support at 15300-15400 levels but till then, we might continue to move sideways to downside. Also, nothing is sure in Trading, so we need to observe price action once we reach 15300-15400 levels in nifty. Also, buyers can show strength and push up prices immediately but that will not be very healthy for uptrend as we saw exhaustion for almost more than two weeks at higher levels in Nifty.
PDH (15780), POC (15700) and PDL (15625) are important levels from previous day’s range. Acceptance below PDH can take prices to test virgin POC at 15825 and price action is critical at 15825. Below PDL, we can test poor low at 15593 and move further down.
Trade plan for today:
I am having sideways to Bearish view in Nifty till prices keep trading below 15825, So I will not be looking for any long trades until prices move above this level. Nifty 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 Nifty is moving down, so until that changes, be cautious about 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.