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, Nifty opened inside previous day’s range and buyers immediately pushed the prices above POC at open. The prices continued upward momentum till 15930 levels which was a all time high maintained from few session, and then lost steam. The bears took advantage of this and pushed the prices back down in the end but still they were not able to close below IB low and we had a NVD down day in Nifty. The value area has moved up but yesterday’s exhaustion shows that Bulls are not ready to give a breakout, or you can say no one is ready to buy at higher levels. So, if this continues for long, we might see a sharper inventory adjustment break to throw all weak buyers out but for now, we might consolidate in a narrow range and if that happens, then there are more chances of a breakout than breakdown.
What can be expected now:
The thing which is clear from yesterday’s price action is that 15930 is very important level and bulls are not yet ready to trade above that level. Now, whether bears cam overcome buying power and make prices move down is something to be observed but in case no one has control, we might end up moving sideways. Sideways movement is good for bulls but if have a sideways to down movement, that is not good for bulls. The clue to observe is that there is an absorption of supply or not at these higher levels.
POC (15930) and PDL (15815) are important levels from previous day’s range. Acceptance above PDH will give a nice breakout and acceptance below PDL can close the buying gap at 15750 and can test virgin POC at 15704.
Trade plan for today:
Nifty is expected to open below previous day’s range and i have no clarity at open auction. I do not have a bearish view on nifty till it trades above virgin POC levels of 15700, so I will wait for open volatility to settle and then decide. I will be bearish only if prices accept below 15700 decisively, otherwise, I will look for a long trade opportunity. Also, these times of low VIX are tough times for intraday trades, so in case of sideways move, we need to be cautious about our exits, in case we get an entry.
- Short trades are risky if prices trade above 15750
- Long trades are risky if prices trade below 15700.
- I am expecting the low of friday (15660) to hold but if it does not, that will change the entire equation.
- Banknifty outperformed nifty yesterday. So, if that outperformance continues, then there could be an upmove in nifty later today.
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.