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 inside previous day’s range and sellers aggressively tried to push prices below PDL in start. After the prices broke PDL, it consolidated and a responsive buying came which took the prices back inside previous day’s range to near IB high. On daily charts, the candle that has formed is a Hammer which have bullish implications (reversal) but what is needed today is the confirmation of the bullish sign, that is we need bulls to follow through on upside today. If that does not happen, we can be cautious and prices might move sideways until we trade below PDL which would then be bearish.
What can be expected now:
We need to see if bulls are able to follow through to upside or not and also the trade facilitation to the upside. I would have a bullish view in case prices starts accepting above PDH. In case prices accept below PDL, my view would be bearish and acceptance inside previous day’s range would mean sideways market and I wold look for trades accordingly.
PDH (15774) and PDL (15699) are important levels from previous day’s range. Acceptance above PDH can take nifty to test Virgin POC at 15855 and acceptance below PDL can can test virgin POC at 15600.
Trade plan for today:
Nifty is expected to open above previous day’s range and we need to see if prices are accepted or gets rejected above PDH and then plan a trade accordingly. Though I might not look for any open auction trade but In case there is a gap and this gap looks like sustaining, I will plan a long trade. I will look for a short trade only if prices accept below PDL and in case of price acceptance inside previous day’s range , I will probably look to trade extremes or may be stay out of market.
- Short trades are risky if prices trade above PDH.
- Long trades are risky if prices trade below PDL.
- The low of Friday becomes a very important support, so shorts above that levels are not okay and prices can reverse from anywhere above that (The lower wick of Hammer is the rejection zone).
- 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.