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 Friday, Nifty opened just above previous day’s range near PDH and after testing PDH, bulls tried to push prices up. After IB range formation, bulls looked exhausted and sellers tried to take advantage of this situation and tried to push prices back inside previous day’s range but they were also not successful and this struggle continued between bulls and bears near PDH and above and below IB range for rest of the day forming a non-trend kind of day. As this day adn the value area formed above PDH, we can still say bulls are in control. Only this sideways movement should not continue for long (as in Banknifty) else this can become bulls exhaustion on higher timeframe also. But for today, we need to see if bulls are able to push prices above PDH or not.
What can be expected now:
Friday’s range was above the PDH, so the price acceptance favours bulls in nifty. So, we need to observe if bulls are able to move prices above PDH and will prices get accepted at a new high or not. Acceptance below PDL will be bearish but this would only mean exhaustion of bulls and probably sideways move unless we have clear indication of selling from higher timeframe. SO, its not advisable to look for short trades.
PDH, POC 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 and below that weak low.
Trade plan for today:
Nifty is expected to open near previous day’s high (PDH) and I will not be very eager to look for a trade at open auction today. I will wait a see where prices are getting accepted and in case they are getting accepted above POC, i will look for a sellers failure or exhaustion to opt for a long trade. No trades below POC unless there is very good opportunity.
- No long trades if prices trade below POC.
- No Short trades if prices trade above POC.
- Nifty showed relative outperformance than Banknifty on Friday, but we need to be cautious on Nifty long trades if Banknifty continues to show weakness. So, keep eye on Banknifty.
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.