Pre-Market Analysis: Nifty Future – 27th Sep 2021

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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 PDH with a gap up but there was no follow through after open and prices came down to test area near PDH. Though there was a buying again from PDH which tested IB high, bulls again failed to give a follow through above IB high and then sellers dragged the prices down to close near PDH. These was a clear lack of strength from Bulls but bears were also not able to take advantage of this weakness and were not even able to push prices back to previous day’s range. Even though it was NVD Down day, the value area has moved up and this can be see as acceptance of prices at higher levels. So, for now, Bull sa re in control but continued exhaustion for some more days will be a caution for bulls.

What can be expected now:

With prices making a new all time high in Nifty and then consolidating at higher levels. we need to see if bulls are able to follow through on upside making a new all time high today and if prices are accepted further higher and get rejected. Acceptance above PDH for a longer duration can give another good move upside but failure to trade above PDH can result in a sideways move in Nifty.

PDH (17935) , POC (17875) and PDL (17818) are important levels from previous day’s range. Above PDH is uncharted territory and prices can move up without major resistance upto 18000. Below PDL, prices can test virgin POC at 17745 and below it, price can close gap testing 17618 levels.

Trade plan for today:

Looking at SGX nifty, Nifty is expected to open above PDH again with a gap up and this gives no clarity at open auction. Such Gaps are difficult for Intraday traders to plan open auction trades. What we need to observe is whether prices are getting accepted or rejected above PDH and may be wait for IB range completion to decide on direction and trade. There is no point of shorting above PDH and similarly there is no point of taking a log trade if prices trade below PDL. Acceptance inside range can be a sideways day which would be a no-trade day.

Some cautions:

  1. No long trades if prices trade below PDL.
  2. No Short trades if prices trade above PDH.
  3. NIfty and Banknifty are now at all time highs together which is very good for bulls. A long trade would be easy to plan if prices show acceptance of new highs in both Nifty and Banknifty, otherwise if any one of them do not show higher level acceptance, we can stay out of long trades.

Disclaimer:

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.

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