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, prices opened above previous day’s high with gap up and responsive sellers tried but were not able bring the price down to close the gap. For the entire day, prices moved sideways forming a non-trend day but the value area moved higher. This shows that higher prices were accepted and therefore the control is with higher timeframe bulls and the uptrend is intact.
What can be expected now:
We are clearly in uptrend and prices seem to be in control of bulls, so we can expect prices to move further up today in case prices accept above PDH , unless there is higher timeframe selling involved. In case prices accept inside previous day’s range, this short timeframe bulls exhaustion is likely to continue and we can also expect a sideways to bullish move. But clearly no point of looking for short trades unless we have very strong signal.
PDH and PDL are levels to look out for price action today. Acceptance above PDH can take the price further up top new highs and acceptance below PDL can close the Buying Gap.
Trade plan for today:
Price expected to open near PDH and we can plan for a long trade in case of break of PDH or OTD up at PDH. In case of a gap up open or acceptance inside previous day’s range, there is not much clarity at open and we can wait to observe price action to look out for a trade. IB range placement will give us more clarity but I am not looking for any short trades today till we are trading above the buying gap.
- No long trades if price trades below PDL.
- No short trades if price trades above PDL.
- Nifty is moving up with gaps which shows a very strong trend, so be cautious if you plan to short. Better avoid.
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.