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 Friday, Nifty opened above previous day’s range with a GAP up and bulls tried to take prices further up but after IB range formation, Sellers entered and pushed the prices back inside previous day’s range. So, friday was a day where sellers showed some strength after being defeated by bulls continuously for last two days. But sellers were not able to move prices below POC and even though it was a NVD down day having bearish indication, the value area actually moved upside. So, the control is still with bulls and even if we move further down from here, it can be viewed only as a pull back.
What can be expected now:
For today, what we need to see is if sellers can push prices below PDL and in case they do, will they get rejected or exhausted or is the trade facilitation good on downside.
PDH , POC and PDL are important levels from previous day’s range. Above PDH, there is uncharted territory and acceptance above PDH can give a good upmove. Below PDL, prices can test virgin POC at 17465 and weak low at 17380.
Trade plan for today:
Nifty is expected to open below previous day’s range with a gap down due to global cues and I do not have much clarity in open auction. Also, I am not convinced to go with sellers, so I will see if sellers are able to follow through downside after a bearish open or not. In case if there is rejections of sellers at any point of time, I might opt for a long trade but not if prices start accepting below IB low later in the day.
- No long trades if prices trade below IB low.
- No Short trades if prices trade above PDL.
- We also need to watch Banknifty because Banknifty needs to show relative strength now, for further upmove.
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.