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, Banknifty opened inside previous day’s range near PDL and POC (also HVN) and after a test of POC, sellers aggressively took prices down below PDL. This shows that the HVN near 34825 (also PDH today) was a likely distribution and that is why , this level becomes very important today. In the first two hours there was a big sell off after which some buying came which pushed the market back upside but bulls were not able to push prices back inside previous day’s range. This was a NVD day down with a big range and value area also shifted downside. So, for now, even though there was some buying in later half yesterday, prices are still in control of Bears and we need to see if they lose control or not today.
What can be expected now:
What we need to see today is whether the buying that came yesterday is strong enough to move prices further upside. PDH level (34825) is very critical today and acceptance above it is not good for bears in short term. Similarly, rejection above PDH or acceptance below PDH is not good for short term bulls.
PDH (34825) , POC (34550) and PDL (34120) are important levels from previous day’s range. Acceptance below PDH can test poor high at 35185 and acceptance below PDL can test swing low at 33930 and might even dip further down.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and there is not much clarity at open auction. What I would watch today is whether prices are accepting above or below PDH. Above PDH is bullish and below PDH is bearish. Also, there can be shorting opportunity after Bulls exhaustion, so I will watch out for that but not if prices trade above PDH. Also, today is expiry, so there are very good chances of prices staying within previous day’s range.
- Short trades are risky if prices trade above PDH
- Long trades are risky if prices trade below PDH
- Banknifty is weaker than Nifty. So, shorting in Banknifty might be a better idea than Nifty.
- Today is expiry, so there are good chances of prices trading inside previous day’s range but if they accept outside, it can be volatile.
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.