Pre-Market Analysis: Banknifty Future – 26th July 2021

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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, Banknifty opened inside previous day’s and sellers tried to push prices below PDL but after a test of PDL, bulls defended this down move and pushed the prices back inside previous day’s range and above IB high but they failed to push prices above PDH. This shows continuation of struggle between bulls and bears, so till this continues , we can expect sideways movement like this in Banknifty.

What can be expected now:

Banknifty was a sideways day, so until we clearly accept above PDH, we cannot say bulls are in control. Also, even in case of acceptance above PDH, we need to watch for trade facilitation by bulls as any exhaustion can give a sharp downside move.

PDH (35130) , POC (34910) , and PDL (34400) are important levels from previous day’s range. Acceptance below PDL can take prices down to test swing low at 33930 and acceptance above PDH can test the selling gap and acceptance above selling gap (35730-35450).

Trade plan for today:

Banknifty is expected to open inside previous day’s range and there is not much clarity at open auction but in case prices break PDL at open, I might opt for a short trade. Also if case prices trading inside previous day’s range, I might look for a short trade on bulls exhaustion. No short trade if prices start accepting above PDH but I will stay away from long trade also in that case.

Some cautions:

  1. Short trades are risky if prices trade above PDH
  2. Long trades are risky if prices trade below PDH
  3. Banknifty is weaker than Nifty. So, shorting in Banknifty might be a better idea than Nifty.

Disclaimer:

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.

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