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, Nifty opened inside previous day’s range and sellers pushed the prices below PDL in the first hour. This looked like sellers day but as we said in the previous post, we need to monitor not only the price breakout beyond previous day’s range but also trade facilitation. After IB range, the sellers were not able to even test IB low and buyers pushed the prices back inside previous days range giving a confirmation of a false breakdown. After that responsive buyers took prices up and tested PDH and closed near PDH forming a NVD up day. This entire price action was sideways, so the struggle from previous day continues.
What can be expected now:
Again, both Nifty and Banknifty moved 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 (17395) and PDL (17265) are important levels from previous day’s range. Above PDH, prices can test all time high of 17450. Below PDL, prices can test virgin POC at 17185.
Trade plan for today:
Nifty is expected to open near PDH and there is not much clarity at open auction. What we need to see is if prices are accepted or rejected above PDH. So, I will again wait to see if prices trade beyond previous day range and how is the trade facilitation before I can decide on a directional trade. In case of clear acceptance and good trade opportunity, 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, Nifty in above statements Indicate Nifty future for current month and not Nifty index.