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 Thursday, Banknifty opened inside previous day’s range near POC and bulls tried to move prices higher above PDH but failed to do so. Bears took advantage of this exhaustion and surprisingly moved prices down with full force. Surprising because yesterday was also expiry, so this is something unexpected. However, the prices were in control of bears throughout yesterday and we formed a trend down day with a nice one timeframing downside. This could be another big inventory adjustment break and we might see prices moving upt0 34500-34700 levels which is the next support.
What can be expected now:
I am expecting prices to move further down but not with such a greater magnitude what we saw yesterday but then anything can happen in markets. So, lets observe today. sideways move.
PDH (34945), POC (35640) and PDL (35260) are important levels from previous day’s range. Acceptance below PDL can take prices down to test virgin POC at 34885 and poor low at 34758. Acceptance above POC is not good for bears.
Trade plan for today:
Banknifty is expected to open near PDL and we need to wait for prices to settle down and see a clear exhaustion of bulls or acceptance below PDL before opting for a short trade. No long trades until prices accept decisively above 35500. Also, remeber that shorts are always tougher than long trades, so we need to be cautious.
- Short trades are risky if prices trade above 35500.
- Long trades are risky if prices trade below 35500.
- Both Nifty and Banknifty are in sync, so we can watch other for confirmation.
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.