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 Monday, Banknifty opened near PDH and sellers tried to push prices back inside previous day’s range but failed. Once it was clear that sellers do not have enough strength, buyers pitched in and pushed Banknifty upside and this up move continued throughout the day resulting in a triple distribution trend day in banknifty. This is also a clear breakout on daily charts from sideways consolidation range and hence, the control is clearly with Bulls now. The only thing we need to watch is whether bulls still wanted to continue up journey with an acceptance above PDH or they wasted to take some rest after such a big day. The single prints would act as buying support in case prices come back and trade inside previous day’s range.
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. IN case prices trade back inside range, we need to wait for a rejection of lower levels to look for a long trade entry. There is no point of looking for short trade unless there is very clear indication now.
PDH (36530) , POC (36200) and PDL (35820) are important levels from previous day’s range. Also, single prints at 36375 and 36000 are important support levels. Above PDH, prices can test virgin POC at 36770 and below PDL , 35700 will act again as support.
Trade plan for today:
Banknifty is also expected to open inside previous day’s range near PDH and there is not point looking for a short trade today. I will also look for a long trade in case of OTD up at PDH ( in case of gap up open above PDH) or at decisive break of PDH else, it is best to wait for IB range formation and then look for a long trade but only above IB low. In case prices trade back inside range, I will look for FB of IB low for a long trade but no trade if prices trade below IB low.
- No long trades if prices trade below IB low.
- No Short trades in Banknifty absolutely.
- Banknifty and Nifty both has a clear breakout, so time to look for long trades.
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.