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, Banknifty opened just near PDH and immediately bulls broke prices on upside giving us the expected follow through and closing at top forming a NVD up day. This follow through on upside is good for bulls and indicates that the correction (down swing) might have ended and we might move upwards. Remember, i am using word “Might” as no one knows future and as Trader, this is the only thing we know for sure that we don’t know future. So, until prices keep accepting higher and value area is moving higher, bulls are in control but we need to always watch what is happening in the market at present and be ready for surprises.
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 or acceptance inside previous day’s range would mean sideways market and I would look for trades accordingly.
PDH (35368) and PDL (35050) are important levels from previous day’s range. Acceptance above PDH can take prices to test Virgin POC at 35520 and then to test swing high near 36000 and acceptance below PDL can test virgin POC at 34900.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and I will ignore any open auction trades and wait for prices to settle down. Later, in case prices accept above PDH, I will plan a long trade.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.
- 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.