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 Thursday, Banknifty opened just above PDL and after a test of waters below PDL, buyers immediately pushed the prices back inside previous day’s range thus giving a rejection below PDL. Thereafter prices tried to break on upside of IB high but was not able to and banknifty ended at the same place as yesterday forming a NVD day up but an overlapping value area. So, the confusion continues today also and we will get clarity only when prices will accept beyond this sideways range and that might happen most likely today, or I will get so bored. Any sideways move inside previous day’s range will give bulls the advantage as then this sideways move is happening after a trend up day which would mean absorbtion of supply but again , we need a follow through upside thereafter. So, I will have sideways to bullish view inside previous day’s range.
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 day before yesterday and yesterday , it overlapped, 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 first day of new series, so better to wait for IB range completion.
PDH (35790) , POC (35650 and PDL (35425) are important levels from previous day’s range. Above PDH, we can test swing high at 35900 and acceptance above it can take prices to test virgin POC at 36000 and below PDL , we can test weak lows at 35100 and below that poor lows at 34848.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and today ios first day of new series. Do better to wait for IB range completion, I am bullish above PDH , bearish below PDL and have a sideways to bullish view inside previous day’s range. So, clearly no shorting above PDL. 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 plan a long trade but need to wait for a good entry point and be cautious if there is any bulls exhaustion.
- 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, keep eye in nifty. In case both indices are out of sync, better to avoid trading today.
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.