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 and sellers tried to push prices down but were not able to test PDH and buying took prices up ending with a NVD day that was completely inside previous day’s range. So, this was another addition to sideways day in Banknifty whereas Nifty closed at new highs. We need to watch out if buyer are able to follow through on upsdie today in banknifty otherwise it would be difficult for Nifty to sustain new highs if Banknifty is not supporting. In case, Banknifty break the sideways zone, there can eb good movement in that particular direction but until we are within this sideways zone, there is not much clarity on banknifty.
What can be expected now:
We need to observe where prices are getting accepted today. Above PDH is bullish , above POC is sideways to bullish and below PDL is bearish.
PDH, POC and PDL are important levels from previous day’s range. Acceptance below PDH can test poor high and swing high . Acceptance inside range will find support at POC, but acceptance below PDL can test poor low and below that , the buying gap zone.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and there is no clarity at open. We need to observe where prices are getting accepted and look at trade facilitation by both bulls and bears to get a trade later. But in case of any confusion, better to stay out.
- Short trades are risky if prices trade above PDH
- Long trades are risky if prices trade below POC.
- Nifty is stronger than Banknifty. Long trades are good only 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.