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 Tuesday, Banknifty went down in Start and then buyers entered to push prices back inside range, On wednesday, prices tested PDH at open but there was no follow through on upside. Also, sellers were not able to push prices below POC and prices ended up moving sideways forming an inside day. So, PDH is a crucial level in Banknifty from price action perspective today. Acceptance above PDH is bullish and acceptance below PDH would mean sideways to bearish in banknifty.
What can be expected now:
There is not much clarity in Banknifty but we can expect Banknifty to pick up a directions today with a bullish open, acceptance above PDH is important for bulls to move prices up. In case, prices get rejected above PDH, bulls need to be cautious.
PDH (37885) and PDL (36985) are important levels from previous day’s range. Above PDH, prices can test virgin POC at 37600 and poor high at 37880. Below PDL , prices can test swing low at 36600.
Trade plan for today:
There is not much clarity at open. We need to see if this prices trades above PDH and sustains and there is no selloff at open. In case of acceptance above PDH, I would be looking for a long trade later and in case of acceptance below PDL. I would look for short trade. No trade if prices stays within previous day’s range. Also, today is expiry, so we need to be cautious about any volatile moves, so in case of favourable price moves, its good to keep booking profits.
- No long trades if prices trade below PDH.
- No Short trades if prices trade above PDL.
- Today is expiry and also there is euphoria at open. So trade cautiously and observe what market is trying to do instead of going with the crowd.
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.