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 Wednesday, Banknifty opened inside previous day’s range and sellers tried to push prices below PDL but failed. After a test of PDL, bulls pushed the prices up but were not able to cross PDH in first half of the day and prices consolidated inside previous day’s range for the first half. In second half, bulls pushed the prices higher and moved up testing the weak levels above PDH and closing almost at the top forming a trend day up. Unlike Nifty which was one timeframing entire day, Banknifty had a consolidation before late upmove which means the last up move could be due to some short covering and in that case, prices can test this consolidation level again which is near POC (36800 levels). Any price acceptance above PDH can give more control to bulls and we might see more short covering in Banknifty giving up thrust to prices but in case of price acceptance inside previous day’s range, there is a good possibility of sideways day in Banknifty due to expiry today.
What can be expected now:
The upmove in Banknifty after consolidation gives upper hand to bulls but bears have not lost full control yet in Banknifty. So, price aceeptance above PDH is the key. But then, there is no point shorting Banknifty and we should be looking for long trade in case of sellers exhaustions and failure of sellers to mark prices down. POC (36800) would be a good level to plan for a long trade in Banknifty in case sellers fail to push prices below this level.
PDH (37060) , POC (36770) and PDL (36600) are important levels from previous day’s range. Above PDH, prices prices can test swing high at 37250 and below PDL, prices can test poor low at 36400.
Trade plan for today:
Banknifty is expected to open inside previous day’s range near PDH and as today is expiry, I will wait and see where IB range is being formed and then decide trade accordingly. In case, prices test POC and sellers fail to take prices below POC, a long trade would be a good entry point there. I am not looking for any short trade in Banknifty, so, in case prices fail to accept above PDH or there is not clear long trade in case of price acceptance inside previous day’s range, I might avoid trades in banknifty today.
- No long trades if prices trade below PDL.
- No Short trades if prices trade above PDL.
- Nifty and Banknifty both showed good movement upside. Expectation is this upmove will continue further in coming days but as today is expiry, so need to remember that while taking trades.
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.