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, Nifty opened above previous day’s range with a gap up and buyers were unable to follow throughon upside after a gap up open, which gave a chance to responsive sellers to take prices down and test PDH . Sellers were also unable to put prices back inside previous day’s range. Though this range was from last month future, we can also see that sellers were not able to push price below IB low and thereafter, responsive buyers took advantage of it and then pushed prices back up again to form NVD on upside. The value area moved up and we are again back near all time highs in nifty. The trade facilitation by buyers was okay if not that great. So, even though, there is a struggle between buyers and sellers at these levels, we can say that buyers are having the control for now and then the friday’s sluggish move can be attributed to absorption of supply.
Having said all this, this will hold good only if we see a good breakout and a good move by buyers above all time high (which can be today). If that does not happen, we might have to re-assess our understanding of Bulls having control.
What can be expected now:
For now, I am expecting prices to start moving higher and or a new all time high but we need to watch trade facilitation by bulls. In case of any rejection or any poor trade facilitation by bulls, we need to be cautious on our Long trades. There is supply coming at these levels and if we stay here, that supply is going to increase, so bulls need a quick move up to prove they have the control.
PDH (15900) and PDL (15800) are important levels from previous day’s range. Acceptance above PDH (15900) can give a good upside to Nifty making new all time high. Acceptance below PDL can test virgin POC (15750) and weak low (15690), but this would also mean that bulls failed to take advantage of opportunity to move higher and we need to be cautious on Long trades.
Trade plan for today:
Nifty is expected to open near PDH and instead of immediately going long, i will wait to see if there is any supply coming from sellers. In case not, I will take a long trade but only if prices accept above PDH. I am not going to take any open auction trade inside previous day’s range and also if prices keep accepting inside previous day’s range and fail to move above PDH, I might look for a short trade but only in the second half.
- Short trades are risky if prices trade above PDH (15900) .
- Long trades are risky if prices trade below PDH (15900).
- Nifty is near all time high and Banknifty is also showing strength now, so this is a good opportunity for Bulls to give a breakout and move prices up. Lets see if they are able to do so.
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.