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 Wednesday, Banknifty opened inside previous day range and bulls pushed the prices up breaking PDH but after IB range completion, it looks like bulls got exhausted. Sellers tried to push prices back inside range and although they dominated rest of the day, they were not able to break even IB low ending the day as Normal day. Value area has moved on upsdie indicating bulls are in control but we need to observe the price action today to see if sellers can take control or not. Another point to note is that today is weekly expiry, so there can be a sideways move which again would favour bulls if that happens.
What can be expected now:
After a struggle between buyers and sellers yesterday, we need to see if sellers are able to follow through downside below PDL or not . But more important is if they are unable to follow through downside and that would give us the clue that this selling yesterday is not from higher timeframe and we can look for a possible long trade in that case.There is no point of looking for short trade unless there is very clear indication and clear acceptance below PDL.
PDH (37087) and PDL (36560) are important levels from previous day’s range. Above PDH, we can test virgin POC at 37270 and below PDL, prices can test virgin POC at 36200. Today is expiry, so there is a good possibility of sideways move inside previous day’s range.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and we need to see if sellers are able to follow through downside below PDL but I will stay out of shorting at open auction. But in case of any rejection below PDL ,I might opt for a long trade. No long trades below PDL and no short trades above PDL later in the day. Also, today is weekly expiry, so we need to be cautious about volatility and possible sideways move.
- No long trades if prices trade below PDL.
- No Short trades in Banknifty if prices trade above PDL
- Today is expiry, so we need to be cautious about any volatility.
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.