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 Wednesday, prices open above previous day’s low, and initiative sellers took the price down below PDL and filled the buying gap (below PDL) at the start. There was strong responsive buying below PDL which pushed the prices back inside previous day’s range. This was failure of Initiative selling and responsive buyers could have dominated entire day by providing support but they were not able to break IB high and later after exhaustion of Buyers, sellers again started pushing prices below PDL again and prices closed below PDL forming NVD down day with value area clearly moving down.
What can be expected now:
Prices in nifty has started correction (that is down swing) in an uptrend. But since today is expiry. there is a high possibility that the price can remain inside previous day’s range with a sideway movement . Only in case of acceptance below PDL, we can expect the price to move down further but buying gap below PDL can act as another support. Similarly we can expect prices to move up in case of acceptance above PDH.
PDH and PDL are levels to look out for price action today. Acceptance above PDH can take the price further up to test Virgin POC and all time high and acceptance below PDL can close the Buying Gap and below that can test Virgin POC and another buying gap below it.
Trade plan for today:
Prices are expected to open inside previous day’s range and there is no clarity at open auction. So, we need to wait and observe price action and IB placement to get a clue on possible trade. A responsive trade on FB of PDH/PDL can be a good opportunity but as today is expiry, there may be a volatility in price and we need to be careful and book partial profit in case trade runs in our favor. Only in case of clear acceptance beyond Previous day’s range, we can plan a trade in that direction.
- No long trades if price trades below PDL.
- No short trades if price trades above PDH.
- Today is expiry day, so there is a higher possibility of sideways move and volatility towards the end, so we need to be cautious.
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.