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, Nifty opened above previous day’s range just above PDH and moved sideways for rest of the day with a slight upper bias but the trade facilitation was not good by the bulls and this shows exhaustion. This is a common phenomenon from last few days where dips are being bought by buyers but there is no good movement on upside. This might go on for a while and till we break above or below this sideways range, it would be difficult to take a directional trade. Prices right now is in no one’s control or we can say bulls and bears are in equilibrium.
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 (15918) and PDL (15840) are important levels from previous day’s range. Acceptance below PDH can test poor high at 15970 and acceptance below PDL can test weak low at 15735.
Trade plan for today:
Nifty is expected to open inside previous day’s range and there is not much clarity at open auction. If prices accept above PDH, I will wait a see price action at 15970 levels. Also, in case prices fail to trade above PDH, I will look for bulls exhaustion to plan for short trade. But in case of short trade, we need to be cautious if prices move in our favour and take partial profits because this buy on dips phenomenon can kill short trades.
- Short trades are risky if prices trade above PDH.
- Long trades are risky if prices trade below PDH.
- Banknifty is weaker than Nifty, so it should continue weakness in case we want to have a good short trade in nifty. so we can take clue from there.
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.