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, Nifty opened above previous day’s range and buyers were not able to follow through on upside and sellers after 15 minutes of struggle pushed prices back inside range. But strangely, strong buyers came after 30 minutes and pushed prices back above PDH and IB high closing the selling gap and forming NVD day on upside. Now why this is strange is that strong buyers instead of acting on the opportunity of a higher open instead acted when prices move sharply down inside range and again they showed exhaustion after breaking PDH. So, it seems that this phenomenon on buying only on dips continues.
What can be expected now:
Though value area moved up, trade facilitation by bull is not good. So, this sideways movement and this struggle is expected to continue until we break this sideways zone (15970 – 15585) decisively. Also, trade facilitation is again poor by buyers, so we are susceptible to any sharp down move till we are not able to break and accept above 16000 levels.
PDH (15895) , POC (15840) and PDL (15763) are important levels from previous day’s range. Acceptance below PDH can test swing high at 15970 and acceptance below PDL can test virgin POC at 15650.
Trade plan for today:
Nifty is expected to open inside previous day’s range and I would be looking for short trades until prices clearly accept above PDH. So, decisive break of PDL or rejection at POC at open could be a good short trade, otherwise I will wait for buyers exhaustion and then look for short trade. I will ignore any short trades if prices start accepting above previous day’s high.
- Short trades are risky if prices trade above PDH.
- Long trades are risky if prices trade below PDH.
- Banknifty is weaker than Nifty, so in case of upmove, Banknifty has to show relative strength.
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.