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 Friday, Banknifty opened inside previous day’s range near POC and Sellers aggressively pushed the prices down below PDL at open itself forming a Big range IB day. After IB range formation, prices tried to move further down following a breakdown below IB low but there awas a good responsive buying from 33940 levels which pushed the prices back inside previous day’s range giving another big move to upside. On daily charts Friday’s price action looks like Hammer, so the lows of Friday become important from higher timeframe perspective. Also, since the value area has moved down, this is still downswing and what we need to see if whether this strong buying towards the end of Friday’s session is able to give follow through and move prices above PDH or not.
What can be expected now:
Similar to nifty, we need to see whether buyers are able to push prices above PDH or not and also whether sellers are able to push prices below PDL or not (we are still in downswing). Any rejection from extremes or acceptance inside previous day’s range will facilitate and sideways movement and since we have a large range day on Friday, there will be very good chances of an Inside day with not so good Intraday opportunities. Also acceptance above or below POC (34225) is important thing to watch out.
PDH (34840) , POC (34225) and PDL (33935) 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 swing lows at 33390 levels.
Trade plan for today:
I will be bullish on Banknifty above PDH and bearish below PDL. Also I am maintaining a sideways view if prices accept inside previous day’s range and in that case, I will probably stay out of directional trade unless I get a very good opportunity. Also, POC area (34225) inside previous day’s range is important from price action perspective.
- Short trades are risky if prices trade above POC.
- Long trades are risky if prices trade below POC.
- Watch Nifty also as both indices are now moving in sync.
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.