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 below previous day’s range with a gap down due to overseas bearishness and Responsive buyers pitched in Buying the dips and pushed the prices back inside previous day’s range but they were not able to push prices above POC. After IB range formation and test of IB high and failure of bulls to accept above IB high, sellers entered and moved prices down breaking both PDL and IB low and closing at the bottom of the day forming Neutral extreme down day. As indicated yesterday, we were not convinced with a gap down open but we were keen on watching the trade facilitation by sellers and in fact they were able to follow through on downside. So, this puts a break on rally and we have started the down swing, though is is still a correction in uptrend.
What can be expected now:
After a big move down yesterday, today can be a sideways day. The control would be with bears till we trade below POC (17500 levels) but if prices start accepting above POC, then sellers could be in problem. Any acceptance below PDL can give more fall in prices today itself but acceptance between POC and PDL will most likely give a sideways move.
PDH (17620) , POC (17500) and PDL (17355) are important levels from previous day’s range. Above PDH, prices can test virgin POC at 17662 and above that, it can test all time high. Below PDL, prices can test swing low at 17265 and acceptance below swing low is not good for buyers in higher timeframe also.
Trade plan for today:
Nifty is expected to open inside previous day’s range near 17400 levels and there is not much clarity at open auction. What we need to see today is if buyers are able to push prices above POC and sustain which would be bullish or if sellers are able to push prices below PDL and sustain which would be bearish. Acceptance between POC and PDL will most likely result in sideways move but in this case, I will probably ignore long trades and might look for short trade if I get any good opportunity.
- No long trades if prices trade below POC (17500).
- No Short trades if prices trade above POC (17500).
- Yesterday was a second day of down move and both of these days were big moves in nifty. So, we need to be cautious on longs till this volatility settles down.
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.