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 PDH and like a typical day expiry, prices just went sideways for entire day. Now even though the Value area moved up, this can be considered as bulls exhaustion if we failed to trade above PDH today and in case we move below PDL, then prices will be back in control of sellers and we might again see a good move downside.
What can be expected now:
We need to observe where prices are getting accepted today. Above PDH is bullish , below PDL is bearish and inside previous day’s range is sideways to bearish. As of now, there is not much clarity and we need to wait for one of the higher timeframe (bulls or bears) to get active and show decisive move.
PDH (34775) , POC (34650) and PDL (34475) are important levels from previous day’s range. Acceptance below PDH can test poor high at 35190 and acceptance below PDL can give a break down and even test swing low at 33935.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and there is not much clarity at open auction. I am bullish above PDH and bearish below PDH but I will probably not look for any long trades today as I am still cautious on longs. So, I will wait for bulls exhaustion or may be break of PDL to take a short trade. Also, I will ignore short trades if prices accept above PDH.
- Short trades are risky if prices trade above PDH.
- Long trades are risky if prices trade below PDH.
- Today is first day of new August series, so levels are not exact as they are from previous series.
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.