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 Tuesday, Banknifty opened near PDH and sellers tried to push prices down in open but failed. Then buyers tried to push prices up above PDH but they also failed and there after for the whole day , prices kept hovering around PDH levels. Contrary to Nifty where buyers were clearly in control, Banknifty was in no one’s control and sellers gave tough fight to buyers but then value area in Banknifty has moved up. So, this sideways move can be seen as absroption of supply if buyers will be able to push prices above PDH today and Banknifty might join Nifty and move up from here. In case prices stays within range or trade below PDL, it would mean sellers are still very active and in this case combined with a weakness in Nifty, this will be caution for bulls in banknifty.
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 (36690) , POC (36510) and PDL (36320) are important levels from previous day’s range. Above PDH, prices can test virgin POC at 36770 and below PDL , virgin POC at 36200, single prints at 36000 and weak low 35820 will act again as support.
Trade plan for today:
I am not trading Intraday today in support of Trader’s against Margin rules. Banknifty is bullish above PDH, sideways inside previous day’s range and bearish if trades below PDL.
- No long trades if prices trade below PDL.
- No Short trades in Banknifty if prices trade above PDH.
- Nifty is having good strength, so if this strength continues today, there is no point looking for any shorts in banknifty also as it will then be matter of time as Banknifty catches up nifty.
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.