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 at previous day’s POC level inside range and initiative buyers pushed the price above PDH in the start. The bulls continued to drive prices higher till above IB high (17300 levels) from where higher timeframe sellers entered and pushed the prices back into range. It was some kind of bulls trap and sellers broke IB low to close market below IB low forming a Neutral extreme down day. Usually these types of days form a swing high so PDH level is very crucial today. In case prices trade above PDH, the sellers can be seen as losing control but s long as they are able to keep prices below PDL, the market is bearish.
What can be expected now:
As bulls were not able to retain higher levels, we can say that prices are in control of sellers until prices start trading above PDH. Also, prices closed near the crucial 17000 levels so PDL is also important as prices were rejected below this level aggressively on Monday. So, PDH and PDL and crucial and we can get a direction only on acceptance beyond these levels. Acceptance Inside range will be a struggle for both bulls and bears because that will also indicate missing follow through by sellers after the move down and we need to be cautious in that case.
PDH (17347), POC (17120) and PDL (17000) are the levels to look out for from previous day’s range. Acceptance above PDH can test the virgin POC at 17500 level. Acceptance below PDL can test buying gap level of 16750.
Trade plan for today:
Prices are expected to open inside previous day’s range and there is not much clarity at open unless we break beyond previous day’s range. In case prices break PDL, i will look for a short trade on clear acceptance but will stay out in open if prices are not able to break PDL. Also, No long trades below PDH. IB range and IB placement can give clarity for later but in case prices trade below PDH, I will be looking for short trades only. Longs only above PDH.
- No Short trades above PDH.
- No Long trades below PDH.
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.