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 Tuesday, prices opened near PDL and tested POC before sellers pushed in down below PDL. After initial 30 minutes moves, there was missing follow through by sellers and prices started moving back up inside previous day’s range but buyers were not able to test IB high. Now this indicates less conviction of sellers to move prices down and less strength of buyers to move prices up and usually result in sideways move but it seemed like higher timeframe sellers entered in last hours and pushed the prices down to close at bottom forming NVD down day. The value area has shifted down.
What can be expected now:
We need to see if the sellers that entered in last hours are able to give follow through to downside today or not. We have seen in yesterday’s prices movement that there is less directional conviction by sellers so we have to be cautious. So only in case prices accept below PDL, I will be bearish on market and that too with caution.
PDH (18160), POC (18080) and PDL (17977) are the levels to look out for from previous day’s range. Above PDH, prices will be fully in control of bulls and below PDL, prices will be in control of sellers and we can test virgin POC at 17920 and below it weak low at 17737.
Trade plan for today:
Prices are expected to open below previous day’s range and I will wait for test of PDL at open and will opt for a short trade only in case of OTD down. In all other scenarios , I will wait for IB range and then decide on my trades. I am bearish only below PDL and bullish if prices fail to trade below PDL but I will prefer more clarity opting for long trades if prices fail to break PDL .
- No long trades below PDL.
- No short trades above PDL.
- Banknifty is weaker than nifty, so we need to keep watching Banknifty to get clues on 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.