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, prices opened inside previous day’s range as open low and moved up but in the second 5 min candle it tested the open again and broke open low which shows the missing conviction of initiative buying. But after breaking open-low sellers were also not able to push the prices further down and for the first half of the day, prices moved sideways inside IB range. In the second half of the day, the bulls took the control of the price and broke IB high and PDH with a big momentum and consolidated again at top of the range forming a double distribution trend day and leaving a single print buying in middle of the profile.
What can be expected now:
As there was a sideways movement in the last hour which is consolidation at the top of the range and we need to observe if there is any follow through action by buyers. In case prices are able to trade above PDH, we can expect a good move and test the virgin POC above it. Also this would indicate the control is with bulls and can give a short covering rally later in the day. Otherwise, if bulls are not able to sustain above PDH and prices accept below this consolidation zone at the top of profile, we can expect prices to test POC levels again where struggle between bulls and bears will continue. Acceptance below POC is not good for bulls.
PDH (18038) , POC (17812) and PDL (17730) are the levels to look out for from previous day’s range. If prices trades above PDH, can expect to test virgin POC at 18325 level and in case of acceptance below PDL, we can expect prices to test swing low at 17658.
Trade plan for today:
Price is expected to open near PDH range and there is not much clarity at open. 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, Nifty in above statements Indicate Nifty future for current month and not Nifty index.