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 above previous day’s range and after a test of PDH, buyers pushed the prices higher and the buying continued till the end forming a NVD on upside and a good trade facilitation by Bulls. On Friday, Banknifty was relatively stronger than Nifty and we also indicated ion previous posts that for Markets to go up, Banknifty as to catch up and therefore show relative strength, which happened on Friday. So, for now, it looks like prices are in control of bulls but if bulls become weak, Bears can take advantage anytime and then the entire story will change. So, we need two things for more upside – Good trade facilitation by Bulls and relative outperformance of Banknifty and these two things we need to observe.
What can be expected now:
I am expecting prices to start moving higher but again trade facilitation by bulls matters a lot. Also, we need to watch Nifty and see if prices are getting accepted at new higher levels or not in Nifty. I will be having bullish view on Banknifty is prices accept above PDH, otherwise I will change my view to Neutral and will probably stay out.
PDH (35665) and PDL (35000) are important levels from previous day’s range. Acceptance above PDH can test poor high at 35740 and then swing high at 35960. Further acceptance above swing high (35960) can give very good move to upsdie. Acceptance below PDL can test virgin POC at 34800 and weak low at 34580.
Trade plan for today:
Banknifty is expected to open near PDH and we need to see where are prices getting accepted – Above or below PDH. In case of acceptance above PDH, i will look for a long trade but in case of acceptance below PDH , i will probably stay out of market. Prolonged acceptance inside previous day’s range will not be good for bulls and in case that happens, we can assume this is exhaustion and then look for short trade later in the day, but strictly no short trades above PDH.
- Short trades are risky if prices trade above PDH (35665)
- Long trades are risky if prices trade below PDH (35665)
- Nifty is near all time high, So we need to watch Nifty also and see if it is holding up or accepting at higher levels, or not.
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.