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 inside previous day’s range just below the single print selling zone of previous day and sellers aggressively took prices down below PDL. In the first two hours there was a big sell off and prices touched crucial zone near 15500 from where some buying came which pushed the market back upside but bulls were not able to close above IB high. This was a NVD day down with a big range and value area also shifted downside. Again, as I have been indicating that we are cautious on longs until we decisively trade above 15970 levels, there is still not much clarity on Nifty as of now.
What can be expected now:
What we need to see today is whether the buying that came yesterday from 15500 levels is strong enough to move prices further upside. PDH level (15775) 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 (15775) , POC (15645) and PDL (15510) are important levels from previous day’s range. Acceptance below PDH can test poor high at 15870 and acceptance below PDL can test swing low at 15464 and might even dip further down.
Trade plan for today:
Nifty 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.
- Today is expiry, so there are very good chances of prices staying within previous day’s range.
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.