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 Wednesday, Nifty opened near PDL and sellers tried to push prices down below PDL twice, once at start and then again after IB range was formed but failed to mark prices lower. This was expected as we indicated in previous post that bulls will have the control till prices trade above PDL or even above 15660 levels. The responsive buying took prices up till POC and formed a NVD day up. Two factors which are against bulls is the value area moving slightly down and bulls not able to test PDH yesterday which still shows the difficulty bulls are still having in moving prices up. What we need to observe today is whether bulls are able to follow through to upside and break PDH and 15930 (poor high) levels. In case they are not able to, this sideways move might continue.
What can be expected now:
As said in previous post also, 15930 is very important level and in case prices are accepted above it, we might see a good upside move. In case prices gets rejected or fail to cross 15930 levels, we might end up moving sideways. Today is also weekly expiry, so one more factor supporting sideways move.
PDH (15900), POC (15840) and PDL (15788) are important levels from previous day’s range. Acceptance above PDH can test poor high at 15930 levels and above that will be 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 inside previous day’s range and I will opt for long trade only if price break or are accepted above PDH, else I will stay out of any open auction trade. I have a bullish view if prices trade above POC and will stay out of markets if prices start trading below POC. I don’t see a good shorting opportunity for now as prices are in control of Bulls.
- Short trades are risky if prices trade above PDH
- Long trades are risky if prices trade below POC.
- Banknifty is outperforming nifty and this is expected as Banknifty has to do a lot of catchup on upside.
- Today is expiry, so be cautious of sideways move and any siudden spikes in the end.
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.