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, Price open inside previous day’s range and tested PDL and got rejected at PDL. Responsive buyers then took the price on upside and broke IB high but the trade facilitation by buyers was not good and mostly price was in sideways movement for the entire day. It shows there is no higher timeframe buyers or sellers are presence today. However the profile was formed with-in previous day’s range and the entire day price traded at the bottom of previous day’s profile.
What can be expected now:
As expected the price was in sideways and took consolidation at the bottom of the profile. But there was a good rejection from bottom and we need to see if buyers are able to push prices further up or not. These type of consolidations are common after a big move down, so I still have a bearish bias if prices fail to trade above PDH. In case of acceptance above PDH, this retracement can go much higher and therefore we need to avoid short trades. Also, There is a single print above today’s profile at 37600 level which may act as a strong resistance, we need to observe the price action at that levels.
PDH (37470) , POC (37145) and PDL (36680) are the levels to look out for from previous day’s range. If price accepted above PDH, we can expect the price to test virgin POC at 38000 provided the single prints at 37600 does not act as resistance. In case price traded below PDL, we can expect prices to test poor low at 36400 levels.
Trade plan for today:
Prices are expected to above PDH and there is not much clarity at open auction. In case prices are accepted above PDH, I will wait and see where IB range is formed and will watch for trade facilitation by bulls. I am cautious on long trades but in case prices fail to trade above POC, I will opt for a short trade. Also, in case of clear acceptance above PDH, I might look for a long trade but later in the day as this would mean the short covering can take prices higher if that happens.
- No short trades above POC.
- No long trades below POC.
- In case of clear acceptance above PDH, don’t look for any long 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, Banknifty in above statements Indicate Banknifty future for current month and not Banknifty index.