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 Wednesday, Banknifty opened inside previous day’s range near PDH andak to buyers immediately tried to push prices above PDH but this was met by sellers who pushed the prices back inside previous day’s range. Now, interesting thing is that sellers after pushing the prices back inside range also were not able to follow through further down after IB range formation and banknifty ended up as a non-trend day with value area moving upside. This is confusing and we need to watch more price action today to get a clarity. Also, we had similar situation in Nifty and it tried to break all time highs and got rejected, so we can also take a clue from price action in Nifty today for a probable trade in Banknifty.
What can be expected now:
After a sideways movement, we need to observe where prices are getting accepted today – Above of below previous day’s range. Since, the value area has moved upside, acceptance inside previous day’s range is also not good for sellers and will favour bulls. Based on where prices are getting accepted, we can decide on a trade but today is also monthly expiry, so expect some volatility.
PDH (35905) , POC (35625) and PDL (35518) are important levels from previous day’s range. Above PDH, we can test virgin POC at 36000 and below PDL , we can test weak lows at 35100.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and what we need to observe today is whether sellers can push prices down below PDL or fail to do so. In case of acceptance below PDL, we can plan a short trade but in case of rejection below PDL or acceptance inside previous day’s range, we can wait a watch as today is expiry and there might be a complete sideways move. Long trade will be good only above PDH.
- No long trades if prices trade below PDL.
- No Short trades if prices trade above PDL.
- PDL is crucial level for observing price action. Also, today is expiry, so need to be aware and cautious.
- Also, keep eye in nifty. In case both indices are out of sync, 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.