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 Friday, Similar to Nifty. Banknifty also opened inside previous day’s range near POC and sellers tried to push prices below PDL aggressively in start but failed. Thereafter buyers pushed the prices above PDH but they also were not successful but prices closed near the top forming a NVD day up. As we discussed on premarket analysis of friday, we would have some clarity on direction once we move out of this range. On friday sellers tried to move it down but failed and today with an expected gap up open, buyers are trying to push it upwards and we need to see if they sustain in giving a follow through to upside or they also fail.
What can be expected now:
We ned to see today if bulls are able to follow through on the upside which means that once prices start trading above previous day’s range, they should not come back inside range. Though trade facilitation above PDH also matters but a mere acceptance would indicate and absorption of supply and prices would be ready to move further up in coming days. In case prices get rejected above PDL, this struggle between buyers and sellers will continue.
PDH, POC and PDL are important levels from previous day’s range. PDH is also all time high and above PDH is no trade zone. Below PDH, price action at POC is crucial and below POC, we can drift down to PDL. Below PDL, we can test weak lows at 35100 and below that poor lows at 34848.
Trade plan for today:
Banknifty is also expected to open above previous day’s range with a big gap up looking at SGX nifty and these type of big gaps are not good for intraday traders. Sellers will be acting on it but we need to observe their intentions and power, that is if they are able to move prices back inside previous day’s range or not. If not, then I would be bullish and will look for long trade but if prices trade below PDH, I will look for short trades but with a caution.
- No long trades if prices trade below PDL.
- No Short trades if prices trade above PDH.
- PDL and PDH 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.