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 Tuesday, Banknifty opened below PDL with a gap down but immediately byers pitched in and took prices back inside previous day’s range with open-low. This is very good indication of rejection of selling which should have given an upside move but after 30 minutes of market open, buyers were exhausted and sellers again pushed prices back below PDL and thereafter prices just consolidated near PDL forming a NVD down day. There is no clarity as of now and as I said yesterday also, it looks like higher timeframes having conviction which gives us directional move is missing. So, these times will be difficult for Intraday trading as Market has entered into a sideways territory. On higher timeframe, we are in a correction in uptrend as value area has formed lower and lets see how long this correction continues or if this correction turns itself to a downtrend.
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 and PDL are important levels from previous day’s range. Acceptance above PDH can take nifty to test swing high and acceptance below PDL can fill the gap and below that test virgin POC.
Trade plan for today:
Banknifty is expected to open inside previous day’s range there is no clarity at open auction. In fact, there is no plan to trade today, so today we will just watch for directional clues. Sometimes, you do not need to have a position to understand clearly what Market is trying to do. This is to get a clarity for the coming days, I feel today is one such day.
- Short trades are risky if prices trade above PDH
- Long trades are risky if prices trade below PDL.
- 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, Banknifty in above statements Indicate Banknifty future for current month and not Banknifty index.