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 Monday, Nifty opened inside previous day’s range but with a big gap down from Friday’s close and just below POC but sellers were not able to take prices futher down to test PDL. The responsive buying that started at POC took the prices up, almost one timeframing upside, to close near the highs of the day and also near PDH, forming a trend up day. Now, as we expected, this was an inside day just because of the large range day on Friday but within this, Buyers have clearly shown the determination of supporting lower prices and there are now lower chances of prices testing Friday’s low but then anything can happen in Markets. What what we need to observe now , is whether bulls are able to absorb all supply and take prices to new All time high in coming days and if they manage to do so, how is the trade facilitation?
What can be expected now:
Today, we need to see whether buyers are able to push prices above PDH or not and give a follow through to upside with acceptance of higher prices. Any rejection above PDH may give us a sideways move for the day. Also in case of acceptance above PDH, we need to look at trade facilitation by buyers.
PDH (15760), POC (15600) and PDL (15510) 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 the Gap area and probably close the gap testing 15365 levels but it is less likely that we will visit PDL.
Trade plan for today:
Nifty is expected to open with a gap up above PDH and I will wait for prices to settle down. I am bullish on Nifty if prices keep accepting above PDH. Also I will switch to 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 (15600) and VWAP (15660) area inside previous day’s range is important from price action perspective.
- Short trades are risky if prices trade above PDH
- Long trades are risky if prices trade below POC.
- Watch What Banknifty is doing 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, Nifty in above statements Indicate Nifty future for current month and not Nifty index.