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 near PDH and after some initial struggle between buyers and sellers, buyers overtook sellers and moved prices above PDH. Then buyers continued moving prices up in Banknifty giving and very good trade facilitation resulting in a trend day up and breaking all time high in Banknifty. Now, we did expected buyers to take control in banknifty if prices accept above PDH but this king of strong upmove in banknifty was a surprise. Later we knew that it probably was event driven (Bad Bank news), so this event driven rally can continue further today also if we keep accepting above PDH.
What can be expected now:
There was a big trend up day in Banknifty which might have surprised many. Ideally, after such a big move , prices stall for sometime but since this rally is event driven, we can move futher up today in Banknifty. Only thing is buyers should keep the control and not let the prices trade below PDH. In case of rejection above PDH, we can be cautious on long trades and probably avoid long trades for the day.
PDH (37856) , POC (37470) and PDL (36990) are important levels from previous day’s range. Above PDH is uncharted territory and acceptance above PDH can move prices up. POC is important support inside previous day’s range and eblow PDL, prices can test vrigin POC at 36800.
Trade plan for today:
Banknifty is expected to open above previous day’s range with a gap up and there is no clarity at open auction. What we need to observe today is whether buyers are able to keep prices above PDH or not. In case they are able to, we can plan for a long trade but in case buyers fail to keep prices above PDH, sellers would be expected to move prices down. But then, it is better to avoid any short trades in banknifty for today even if there is a rejection above PDH.
- No long trades if prices trade below PDH.
- 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 also until we see some clear selling.
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.