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 Monday, Banknifty opened near PDH and bulls tried to take prices up above PDH but after breaking PDH on upside, they were not able to give further follow through up. this shows presence of Sellers whenever prices is trying to move up. After some consolidation above PDH, sellers pushed the prices back inside previous day’s range and tested POC and again buyers took control and pushed prices back up. This show buyers are present in case of any down move. The price action from both these buyers and sellers was responsive in nature, that means they acted only on favourable prices. So the struggle is expected to continue unless there is an initiative price action. Overall, if we have to pick side, this exhaustion favours bears and we are in upswing and this struggle weakens the upswing.
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 (34988) and PDL (34676) 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 34100
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.
- Nifty is stronger than Banknifty. The trades are good if we get confirmation from both indices, so watch out for Nifty also.
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.