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 near to PDH and sellers tried to push prices down in start but they were not above to push prices even below POC. There was a buying at POC which pushed prices back up and above PDH and IB high but after that the prices just moved sideways with a slight upside bias as if Bulls have lost momentum forming a NVD up day. The value areas has formed on upside and there is no point looking at short trades till we keep moving up. From past couple of days, there is good buying at every dip market takes, so it would need to good one bearish day to turn over the sentiments. Till that happens, this dips buying might continue and in case of poor trade facilitation by bulls, it would be difficult to get a good move even upside.
What can be expected now:
Nifty clearly had a breakout and sustained this breakout, So, we can expect prices to keep moving higher if there is acceptance above PDH. Also, we can expect dips to be bought again but longs are risky if prices start accepting below PDL as acceptance below PDL might start the correction.
PDH (16587) , POC (16550) and PDL (16460) are important levels from previous day’s range. Acceptance above PDH can give a good move upside and acceptance below PDL can go and test virgin POC at 16335.
Trade plan for today:
Nifty is expected to open inside previous day’s range and there is no clarity at open auction. So, we need to wait for IB range completion and then decide on the direction based on where the IB range is being formed , below or above POC and if there is good trade facilitation in that direction or exhaustion. It is not easy to trade these type of market on Intraday basis, so staying out is also a good option till we have some clarity and we see market getting back to being tradeable.
- No long trades if prices trade below POC.
- No short trades if prices trade above POC.
- Nifty is continuously moving upside and Banknifty is moving sideways. So, these two indices are not in sync which makes the point of staying out of market even more sensible.
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.