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, Banknifty opened inside previous day’s range and bulls tried to push prices above PDH in start but failed and then for the entire day, it consolidated sideways making a non-trend inside day. This could be due to expiry but this adds up to confusion and do not give us any clarity on the directions. SO, we need to observe if there can be a follow through with good trade facilitation on either side. Also, in case of directional move with poor trade facilitation, there is chance of reversal and struggle continuing. That is why trading becomes somewhat risky in current situation.
What can be expected now:
Both Nifty and Banknifty have started moving sideways. This can be seen both absorption of supply at higher levels which means bulls or exhaustion of bulls at higher levels which gives bearish indication. But what actually it is will be clear once we have follow through with good participation or trade facilitation in any direction. This is what we need to observe today.
PDH (36965) and PDL (36650) are important levels from previous day’s range. Above PDH, prices prices can test swing high at 37250 and below PDL, prices can test weak low at 36500 and below that virgin POC at 36200.
Trade plan for today:
Banknifty is expected to open inside previous day’s range and there is no clarity at open auction. Since, we are opening after a long weekend, price movement can be volatile. I will not be very eager to look for a trade at open auction today and if there is no clarity later also, I will prefer not opting for any trade. But if there is some clarity later, I will look for long trades above PDH and short trades below PDL.
- No long trades if prices trade below PDL.
- No Short trades if prices trade above PDH.
- Nifty and Banknifty both have started moving sideways for now, so we need to wait and watch,
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.