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 Monday, Banknifty opened inside previous day’s range and sellers pushe the prices below PDL at open itself but after IB range formation, there were not able to push prices further down and then for the entire day, prices consolidated between PDL and IB low forming a non-trend day but with a lower value area. This looks like in control of sellers but poor trade faciliation is the warning sign. In case sellers are not able to push prices further down, there are chances of buyers taking over the control in Banknifty.
What can be expected now:
Unlike Nifty, buyers in Banknifty were not able to push prices back inside previous day’s range and therefore there is a discrepency again in both the indices with Banknifty underperforming Nifty. Unless Banknifty clear breaks the sideways zone, trading would be risky in Banknifty, but in case Nifty starts showing weakness, we can observe and look for shoring Banknifty but not until it is clearly accepting below PDL.
PDH and PDL are important levels from previous day’s range. Above PDH, prices prices can test swing high at 37250 and below PDL, prices can test virgin POC at 36200.
Trade plan for today:
Banknifty is expected to open inside previous day’s range near PDH and there is no clarity at open auction. IN case prices fail to trade above PDH, I will wait for IB range completion in Banknifty and then look for a trade later based on the IB placement. I would be bearish in banknifty only below PDL but in case sellers fail to break PDL, I will be looking for a possible long trade in Banknifty. In case, prices do not show any clarity, it would be better to stay out and wait and watch.
- No long trades if prices trade below PDL.
- No Short trades if prices trade above PDL.
- Banknifty is showing weakness and NIfty is showing strength, so there is no clarity for now and we need to wait a watch till we get a clarity.
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.