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 above previous day’s range with a gap up and formed a new all time high but sellers aggressively pushed the prices back inside previous day’s range. So one thing is clear that buyers and not in hurry to take prices up, but with every down move buyers are pitching in to absorb the supply and this was evident from sellers not able to take prices down to test PDL and prices consolidated inside previous day’s range forming a NVD down day. So, still the view that prices might break on upside in coming days is valid but what we need to see today is whether sellers are able to follow through to downside and close below PDL or not.
What can be expected now:
For now, I am expecting prices to move sideways and there is not much clarity. It looks like higher timeframes are keeping themselves out or slowly building their positions ( whether long or short? we will only know it once they start moving prices). Until then this struggle without anyone (Bulls or Bears) dominating is expected to continue.
PDH (15930) and PDL (15825) are important levels from previous day’s range. Acceptance above PDH (15930) can give a good upside to Nifty at all time high territory. Acceptance below PDL can test poor low at 15800 and acceptance below that can take prices down to virgin POC (15750) and weak low (15685) levels.
Trade plan for today:
Nifty is expected to open inside previous day’s range near previous day’s close and there is no clarity at open auction. What we need to observe today is whether sellers are able to push prices below PDL or prices get rejected below PDL. Based on this, we can look for a directional trade. In case of price acceptance within previous day’s range, prices might move sideways but if that happens, short trades will be risky than longs (as it means sellers failed to give follow through downside). Based on this price action, I might look for trades.
- Short trades are risky if prices trade above PDL (15825) .
- Long trades are risky if prices trade below PDL (1582500).
- Good thing is Banknifty is in sync with nifty, so we can take additional confirmation from it.
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.