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, Price open inside previous day’s range and prices tested POC but sellers were not able to move prices further down. Prices moved sideways in the first half of the day with a small to medium IB range and in second half, bulls took the price above IB and broke the previous day’s high to close at the top of profile forming a NVD day up with a single print buying in between the profile.
What can be expected now:
We need to see if bulls are able to push prices further on upside. In case of clear acceptance above PDH, we can expect an upside movement. In case prices failed to move above PDH, we can expect some selling pressure and single prints and POC can act as a support for the prices but acceptance below POC is not good for bulls.
PDH (40116) , POC (39500) and PDL (39254) are the levels to look out for from previous day’s range. If prices trade above PDH, can expect to test HVN levels at 40650. Acceptance below PDL can test swing low 38600 levels.
Trade plan for today:
There is not much clarity at open auction and we need to wait and see If prices are accepted above or below PDH and can plan a trade accordingly. Only in case of clear acceptance above PDH, I will plan for a long trade, otherwise I will wait for IB range formation and then based on whether prices are accepted above or below PDH, I can plan a trade. For short trade, I will wait for clear acceptance inside previous day’s range below the upper consolidation levels.
- No long trades below PDH
- No short trades above PDH.
- Tomorrow is expiry, so in case of missing higher timeframes, we might end up moving sideways also.
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, Banknifty in above statements Indicate Banknifty future for current month and not Banknifty index.