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 Thursday, Nifty opened inside previous day’s range and sellers tried to push prices down below PDL but failed . As we talked in previous day’s pre-market analysis, we need to watch if prices are rejected below PDL and as expected Bulls came when prices tested PDL and pushed the prices up above PDL. This buying continued entire day and prices closed at the top and above PDH forming trend day up with a clear one-time framing. This movement of yesterday further confirms our understanding that control is with bulls and all dips probably being bought. The selling that is coming is from lower timeframe and does not have much strength. With the same understanding, we can expect prices to move further upside today also if there is acceptance above PDH otherwise any rejection above PDH can lead to a sideways day and bulls can expected to buy dips. There is no point going short in Nifty unless we have some clear strong indication from sellers which is missing as of now.
What can be expected now:
We need to observe where prices are getting accepted – above or below PDH. In case of acceptance above PDH, prices can move further upside and in case of rejection above PDH, there can be be sideways move inside previous day’s range.
PDH and PDL 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 and I am expecting prices to test area between 17450-17500 in coming days. In case of acceptance below PDL, prices can test virgin POC at 16995.
Trade plan for today:
Nifty is expected to open near previous day’s high (PDH) and I will look for a long trade in case of OTD up at PDH or if prices break PDH at open. In case of rejection above PDH, I will choose to ignore any trades at open auction and will wait for IB range formation. The IB range will give further clarification but in general, I would avoid short trades above PDH and long trades below PDH.
- No long trades if prices trade below PDH.
- No Short trades if prices trade above PDH.
- Banknifty is not as strong a Nifty. So for bulls to continue having control, Banknifty has to start moving up. So, keep observing Banknifty along with 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, Nifty in above statements Indicate Nifty future for current month and not Nifty index.