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 Tuesday, Nifty opened inside previous day’s range near PDH and sellers tried to push it down in the start but failed to push it below POC levels from where buyers entered and pushed the prices on upside above IB high and above PDH, one -timeframing upside and forming a NVD up day. The value area moved higher which is favouring buyers and the trade facilitation was good by buyers. This indicates that bulls are taking over the control now from sellers and we need to see if prices are able to follow through on upside or not. Yesterday move was something which I did not expected inspite of having a bullish view above POC (as indicated in yesterday’s post) especially in Banknifty but this move can be result of sellers exhaustion, so we need to still be cautious till we cross and accept above all time high levels in Nifty.
What can be expected now:
We can expect buyers to give a follow through to the upside but if they fail to tarde above PDH, we can have a sideways to down day in Nifty. Since, yesterday’s price action is good from buyers, there is a conviction from buyers which is missing in case of sellers unless we have once such day from sellers. Buyers struggling to take prices up again would add to the confusion as we have seen already the trade facilitation at the top has been poor by buyers from last couple of weeks.
PDH (16642) , POC (16545) and PDL (16495) are important levels from previous day’s range. Above PDH, prices can test virgin POC at 16665 and then all time high level at 16688 and below PDL, prices can fall big to test weak low levels at 16390. Inside previous day’s range, failure to trade above PDH can take prices all the way down to test POC levels.
Trade plan for today:
Nifty is expected to open near PDH and there is no clarity at open auction. Though we are expecting bulls to follow through to upside, we need to wait for sometime to check the acceptance above PDH before we decide on any long trade. Prices trading below PDH is not good for bulls as that would mean the follow through by buyers after such a good one-time framing move is missing and we can look for a short trade but then we need to be cautious as POC is a level which will provide good support inside previous day’s range.
- No long trades if prices trade below PDH.
- No Short trades if prices trade above PDH.
- Banknifty has outperformed Nifty yesterday, So we need to take clues from Banknifty as see if it is still in control of Bulls or not.
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.