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:
After a trend day down move on Wednesday. prices opened inside previous day’s range on Thursday near POC following a US markets bullishness. But bulls were unable to take prices above POC . Also, sellers were not able to take control and Banknifty ended up as a sideways inside non-trend day. Now, this sideways move happened on a expiry day and also before RBI event scheduled for today, so it was kind of expected but what we need to see is who takes control after the event is over- Bulls or Bears. So, whether we trade above previous day’s range or below previous day’s range is the price action to watch out for today.
What can be expected now:
We are not clear if the sellers who marked the prices down on Wednesday have given up control or not. In case they have not, they will not allow the prices to trade above PDH but in case bulls have taken over control, the prices should move up and accept above PDH. This is what we need to observe today and take decisions accordingly.
PDH and PDL are important levels from previous day’s range. Above PDH, we can test poor high and and below PDL, prices can test poor low, both poor levels from Wednesday high and lows.
Trade plan for today:
Prices are expected to open inside previous day range and there is not much clarity at open auction. Also today is RBI event, so not much participation is expected at open. Once the event is over, there might be volatility and then we can decide based on whether prices are accepted or rejected above or below previous day’s range to take a trade in that direction. Prices accepting within previous day’s range would indicate a sideways market and better to stay out of it.
- No long trades if prices trade below PDL.
- No Short trades if prices trade above PDH.
- Yesterday both indices moved sideways which could be due to expiry and RBI event today, So expect some volatility after the event and be cautious on your positions.
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.