Pre-Market Analysis: Banknifty Future – 7th Dec 2021

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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, price opened inside previous day’s range and initiative sellers pushed the prices down below PDL in the start but there was a strong responsive buying which took the prices back inside range and followed through on upside to test open-high. This was the case of initiative selling failure but responsive buyers were not able to push prices further above open-high which formed IB high and prices consolidated inside IB range for most part of the day only to break below and close at the bottom towards the end. The day type was NVD down day and value area shifted down.

What can be expected now:

We need to see if sellers can push prices further on downside. In case of clear acceptance below PDL, we can expect a downside movement.  In case prices failed to move below PDL, we can expect sideways movement.  

PDH (36490), POC (36260) and PDL (35840) are the levels to look out for from previous day’s range. Acceptance above PDH can test virgin POC and acceptance below PDL can test swing low.

Trade plan for today:

We can expect the price to open inside previous day’s range and we need to see the price action at POC. I am bearish below POC and bullish above POC but in case of acceptance below PDL, we can opt for short trade at open. Otherwise we need to wait for IB range completion and then look for appropriate trades based on IB placement with respect to POC.

Some cautions:

  1. No Short trades above POC.
  2. No Long trades below POC.

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