Pre-Market Analysis: Nifty Future – 27th Aug 2021

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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, Nifty opened just above PDL and buyers immediately pushed the prices back inside previous day’s range thus giving a rejection below PDL and there were two things we discussed yesterday – prices need a follow through to downside for sellers to be in control which did not happened. Prices trading sideways due to yesterday being Monthly options expiry which looked like the case as after the initial rejection of PDL, buyers were not able to take prices higher above POC and prices mostly ended up trading between POC and PDL forming another non-trend day but with a lower value area. So, we need to observe today’s price action looking for same – Acceptance below PDL is good for sellers and acceptance above PDH is good or buyers. Also, today is the first day of new series (September series), so levels are not accurate as they are from August series.

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 down, acceptance inside previous day’s range is also not good for buyers and will look like buyer’s exhaustion. Based on where prices are getting accepted, we can decide on a trade but as today is the first day of new series, its better to wait for IB range completion and take IB high/low as references.

PDH (16671) and PDL (16572) are important levels from previous day’s range. Above PDH, we can attempt to test all time high again (16713) and above that price can keep moving higher but below PDL, we can test virgin POC at 16540 and then weak low at 16495.

Trade plan for today:

Nifty is expected to open inside previous day’s range near PDH and I will wait for IB range completion today before deciding on a trade. I am bullish above PDH and bearish below PDH but a long trade can be taken above IB high and a short trade below IB low as this is new series and IB range will give us exact references. Also no long below PDH and no short trades above PDH.

Some cautions:

  1. No long trades if prices trade below PDH.
  2. No Short trades if prices trade above PDH.
  3. Its a first day of new series, so better to wait for IB range completion. Also watch out for strength and weakness in Banknifty.

Disclaimer:

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.

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