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 initiative buying took prices above PDH at open itself and continued the upmove throughout the rest of the day. There was a clear warning of a good directional movement in yesterday’s pre-market analysis and at least a stern warning not to go for any shorts above PDH, and I hope this advise was taken. The trade facilitation on upside was good and although not as good as Nifty in the second half, Banknifty ended as NVD up day with just some distance below all time high. So, what we need to see today is if bulls can follow through to upside and make a new high in Banknifty or not.
What can be expected now:
Banknifty is not as bullish as Nifty although both indices look in control of Bulls as of now. But Bears might have to act today if they want any control. So, it becomes important to see if prices are accepted above PDH or not today. In case of acceptance above PDH for a good amount of time, it is likely that we can see further upside in Banknifty but in case of rejection above PDH, bulls need to be cautious and the fight between bulls and bears is likely to resume amidst high volatility.
PDH , POC and PDL are important levels from previous day’s range. Above PDH, prices can test all time high levels and below PDL, virgin POC can be tested. POC is also important level inside previous day’s range and bulls are expected to defend it.
Trade plan for today:
There is not much clarity at open so we have to wait and watch. If we miss a trade due to inititive action, its okay to miss it as we cannot catch all moves. 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 but with caution and POC is one level where responsive buyers can enter but acceptance below POC would be advantage bears in shorter timeframe.
- No long trades if prices trade below PDH.
- No Short trades if prices trade above PDH.
- Banknifty is yet to test all time high and if it does today, it will be bullish for NIfty as well and we can expect further upmove in both indices in coming days.
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.