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 with a gap up due to bullishness in overseas market but sellers immediately pushed the prices back inside previous day’s range. After IB range break towards downside, some buyers pitched in and supported the fall but they were not able to take prices above IB high and prices halted near PDH levels. The value area has slightly moved up, so sellers do not have same advantage as they were having on before Monday but buyers also seem like interested in buying dips and not moving prices higher. So, there is not much clarity and this confusion will continue till we have a decisive move in one direction. Overall, broader markets were bleeding yesterday also and index was supported which is not a very healthy sign for uptrend.
What can be expected now:
There seems to be lack of Interest in both Buyers and Sellers in moving prices, so until that resolves, we might continue the same sideways trend and the key to trading these markets would be mean reversions but this is not easy as we need to identify levels properly and in case of favourable move, keep on booking profits. But in case markets shows a decisive move in one direction which can be observed from price accepting beyond range and one time framing, then we can align our self in that direction.
PDH (16565), POC (16485) and PDL (16390) are important levels from previous day’s range. Above PDH, prices can test single print level of 16610 and acceptance above that can test all time high of 16685. Acceptance below PDL can test 16340 levels. Also, inside range POC levels at 16485 is very important.
Trade plan for today:
Again, due to overseas market bullishness reflected in SGX nifty, we can expect Nifty to open above PDH with a gap up but again there is not much clarity at open auction. It seems like Market is in control of sellers but everyday there is a bullish open due to US market bullishness and that is testing sellers everyday. So unless they give up or unless they full overcome buyers, it is going to be tough to decide. So, today, I will observe where prices are getting accepted and then decide on my trade. No shorts above PDH and no longs below PDL but I am also bullish above POC and bearish below POC with caution.
- No long trades if prices trade below PDL or POC.
- No Short trades if prices trade above PDH.
- Whenever there is confusion, it is best to stay out and observe and today is one such day.
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.