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, Nifty opened just above PDH and tested PDH and buyers pushed it immediately to upside with an OTD up at open. But after first 30 minutes, there was no follow through to the upside and prices moved sideways. This could have been absorption of supply but when buyers tried to break IB high on upside , there was a sudden selling which took prices to IB low which indicates big sellers present at top. Thereafter prices moved sideways forming a Non-trend day. Although, value area moved up, the prices closed at the bottom. This non-trend day would have been used by higher timeframes to establish positions ( long , short of both), and today we need to watch who has the upper hand. Prices trading below PDL means bears are in control in short term and prices trading above PDH would clearly mean bulls were absorbing the supply and can move further up.
What can be expected now:
After a sideways movement, we need to observer 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 (16713) and PDL (16616) are important levels from previous day’s range. Above PDH, there is no trade zone and we can keep moving up and below PDL, we can test virgin POC at 16540 and then weak low at 16495.
Trade plan for today:
Nifty is expected to open side 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.
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.