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, price opened inside previous day’s range with open drive (open high) and initiative selling drove the price from the start and filled the selling gap below PDL. The down move continued with sellers having control with one time framing for almost entire day. Responsive buyers entered in the last hour and took the price up but were not able to push prices back inside range. Value area shifted down and day ended as a trend day down.
What can be expected now:
There was a good enough responsive buying towards the end, so we need to see if responsive buyers are able to move the price upside as follow through buying, or if sellers still have the control and take prices further below PDL. Acceptance below PDL is not good for buyers but any rejection below PDL or any acceptance above PDL would indicate exhaustion of sellers which can form a swing low on higher timeframe.
PDH, POC and PDL are levels to look out for price action today. Acceptance above PDH can take the price further up to test poor high and Virgin POC. Acceptance below PDL can close the Buying Gap where again some support is expected but acceptance below that is not good for buyers in higher timeframe also.
Trade plan for today:
Prices are expected to open inside previous day’s range and there is not much clarity at open. Only in case of clear acceptance above PDH, we can plan for a long trade, Otherwise we can wait for IB range formation and then look at the IB placement to look for trade opportunity. MY bias is Bullish above POC and bearish below POC but we can also plan for a risky long trade in case prices test PDL and gets rejected below PDL. But strictly no long trades below PDL and no short trades above PDL.
- No long trades if price trades below POC.
- No short trades if price trades above POC.
- We need to observe bank nifty as it is closed at All time high. Bank nifty is stronger than Nifty and price movement in Banknifty can dominate the Nifty.
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.