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, Nifty opened above previous day range and after testing PDH, bulls pushed the prices up. This was OTD up and indicates a good upmove possibility but after IB range formation, bulls were not able to continue up and sellers took advantage and moved prices down forming a NVD down day and closed at the bottom. But value area has formed upside and after a big move from last two days , today can be seen as bulls taking a breather. So, unless we clearly accept and move down below PDL, the prices can be still seen in control of bulls. 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 showing a rejection from highs yesterday , we need to see if sellers are able to follow through downside or not today. But more importantly, 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.
PDH (17228), POC (17130) and PDL (17082) are important levels from previous day’s range. PDH is also all time high and above PDH is no trade zone. So, acceptance above PDH can take prices higher. In case of acceptance below PDL, prices can test virgin POC at 16995.
Trade plan for today:
Nifty is expected to open inside previous day’s range near PDL and we need to see if sellers are able to follow through downside below PDL or not but I will stay out of any short trades at open auction even if sellers are able to push prices below PDL as there are good chances of rejection. In case of any rejection below PDL ,I might opt for a long trade but with caution as today is expiry. After IB range formation, I will look for trades based on where IB range is formed but no long trades below PDL and no short trades above PDL. 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 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, Nifty in above statements Indicate Nifty future for current month and not Nifty index.