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 PDL. Also buyers even though prevent prices from moving down, they failed to take prices above PDH and then Banknifty moved sideways for entire day forming a non-trend day and also inside day. This is happening when Nifty is moving up everyday, so there is confusion in banknifty. This confusion will only resolve once we see a good breakout or good breakdown in Banknifty. As of now, both buyers and sellers are in equlibrium in Banknifty. So, its better to stay out of Banknifty till this confusion resolves on one side.
What can be expected now:
We need to observe where prices are getting accepted today. Above PDH is bullish and below PDL is bearish in Banknifty but even though , the prices should not get rejected once they move above or below previous day’s range, otherwise it can turn sideways again. Though with range getting narrower , we can expect and good move on one direction but we do not know when that move will come , so we need to keep watching for it.
PDH (36268) and PDL (36070) are important levels from previous day’s range. Acceptance below PDH can test poor high (36390) and swing high (36520) . Acceptance below PDL can test poor low (35670) 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 PDL.
- Banknifty is moving in sideways tight range and is ripe for a good move up or down. Till that happens, better to avoid trading Banknifty.
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.