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 Wednesday, Bankniftyfty opened inside previous day’s range and sellers pushed the prices down from the start and there was some buying at PDL due to which prices moved sideways but bulls failed to take prices up above IB High. The responsive sellers then took prices down below PDL and closed at the bottom of the day forming NVD down day. The trade facilitation was not good from buyers as well as sellers, so it looked more like absence of higher timeframe participants. This could be due to monthly expiry which is today, so in that case, we can expect another sideways day today after which we might get a directional move.
What can be expected now:
After a good move up on higher timeframe, the last two days looks more like a sideways move and we ned to see which direction prices move in coming days. There are higher chances of prices moving up but today, we can see a sideways move due to monthly expiry.
PDH and PDL are important levels from previous day’s range. Acceptance above PDH can take prices up to test poor high at 35460 levels and price acceptance below PDL can test virgin POC (34400) levels.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and there is not much clarity at open auction. I will be looking for a mean reversion trades at extremes but I would be more comfortable with long trades rather than short trades due to my overall bullish view in Nifty and Banknifty. In case prices move sideways, I will probably stay out of market in case there is no good opportunity.
- Short trades are risky if prices trade above PDH (35285)
- Long trades are risky if prices trade below virgin POC (34400).
- Today is monthly expiry, so we can expect sideways movement and premium erosion.
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.