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, prices opened inside previous day’s range near PDL and initiative sellers pushed prices down. What we were looking for yesterday is if the sellers can follow through the prices below PDL or not and they did follow through to downside indicating that selling was from higher timeframe. For rest of the day, prices moved further down and created a Trend day down with one timeframe selling in most of the (periods) candles. Price closed at the low of the day and value area migrated down. So, we can clearly say that Prices are in control of sellers for now.
What can be expected now:
Prices on higher timeframe also have a clear breakdown, so we can say sellers are in control. What we need to see today is again if sellers can follow through to downside. Prices are expected to open near PDL levels. In case of open below PDL or any acceptance below PDL, we can expect further down move. If prices fail to break below PDL, we can expect a sideways to up move which can test POC as a little retracement from the big selling which happened yesterday. Only in case of clear acceptance above POC, we need to review our judgement of sellers in control. So, no long trades below POC and no short trades above POC.
PDH (18206 , POC (18045) and PDL (17850) are the levels to look out for from previous day’s range. Below PDL, prices can test 17640 levels and below that virgin POC at 17510. In case of acceptance above PDH, the prices can move higher due to short covering but this is less likely to happen today (but anything can happen).
Trade plan for today:
If price open with a big gap down, we will watch the price action for some time and plan for a trade after prices settle down So, no open auction trade in that case. But, in case if prices open just below PDL or breaks PDL with acceptance below PDL, we can plan for a short trade. Also, OTD down at PDL can be a good short trade. If prices fail to break PDL, we can look for a short trade again at rejection above POC else we need to wait for IB range completion and look at the IB placement with respect to POC. I am bullish above POC and bearish below POC.
- No long trades below POC.
- No short trades above POC.
- Today is beginning of new series (Nov series), so we need to observe the price adjustments and the levels we have are from October series
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.