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, price opened below previous day’s low with gap down and there was no follow up selling by sellers. The responsive buyers pushed the price inside previous day’s range, broke IB high but failed to move further upside. Responsive sellers were also not able to push prices down and prices traded sideways but in the last hour, higher timeframe sellers took the price in control and pushed the price down to close below PDL and IB low. The value area has shifted down side forming a neutral extreme day with prices closing at the bottom of the profile.
What can be expected now:
There was a clear selling happened in last 3 days, but the small time buyers were defending the price however they are not able to sustain it. We need to see if the sellers that entered in last hours can give follow through to downside or not. Overall the trend is towards downside but as today is expiry day, we can expect volatility, especially in the second half of the day.
PDH (18028) , POC (17980) and PDL (17895) are the levels to look out for from previous day’s range. Prices accepting above PDH can test virgin POC at 18080 and prices accepting below PDL can test weak low at 17735.
Trade plan for today:
Prices are expected to open near PDL and If it is open with gap down, I will wait for the price to retrace to test the PDL and plan for a short trade after prices failed to trade above PDL (OTD down at PDL). If it is open inside range and break down the PDL, I will go for a short trade on clear acceptance. I am bearish below POC and not bearish above POC, so if there is no open auction trade, I will wait for IB formation with respect to POC and then plan for a trade.
- No Short trades above POC.
- No Long trades below POC.
- Short trades are risky till prices accept below PDL, so we need to be cautious on our trades.
- As today is expiry day there will be high volatility in price movement, so we need to cautious on our 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.