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 opened inside previous day’s range near PDH and price traded sideways for most port of the day forming a small IB. This looked like absorption of supply and Buyer’s C tried to push the price above IBH but couldn’t break PDH. This sideways movement then turned into Bulls exhaustion and as a result we had responsive sellers taking control and pushing the price below IBL to test previous day’s POC. The value area has moved up and this last hour down move can be seen as inventory adjustment break if prices are support and come back above PDH. The day type was NVD down day.
What can be expected now:
As prices closed near previous day’s low, we can say sellers had control over the price at the end of the day. We need to observe the price movement during the open, if sellers are above to push it below PDL and in case of acceptance below PDL, we can expect further down move in nifty. If prices fail to break below PDL and get accepted above PDL, we can expect a sideways to up move and can test POC. In case of acceptance above PDH , we can expect a good movement further on upside.
PDH (18350) , POC (18310) and PDL (18180) are the levels to look out for from previous day’s range. Prices can test Poor high (18465) in case of acceptance above PDH and in case of acceptance below PDL, prices can test weak low at 18108.
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 below PDL, I will plan for a short trade, otherwise I will wait for IB range formation and then look at the IB placement with respect to POC and PDL. I will look for responsive buying above PDL if prices fail to break PDL. Today is also expiry, so need to be cautious on my trades and take less risk and prices can move completely sideways with volatility towards end.
- No long trades below PDL.
- No short trades above PDL.
- Today is expiry day and we can expect a high volatility in price movement and need to be cautious while taking trades.
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.