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, Nifty opened inside previous day’s range but just below PDH and there was a lot of struggle between buyers and sellers in the start and prices moved sideways near PDH. Now this all price action happened above POC and as indicated in previous day’s post, acceptance above POC is bullish. Buyers after some sideways movement due to struggle broke IB high mid-day and prices continued upward journey from there on to halt just below 18000 levels forming a NVD up day and another bullish day. This has been a very sharp rally from few days and prices are near crucial 18000 level which may interest other timeframes and therefore can act as resistance. So, what we need to observe today is whether bulls are able to break this 18000 levels and accept above it or not. In case they are not able to break 18000 and accept above, we may see some kind of down move which would be more due to profit booking unless the prices go below PDL.
What can be expected now:
We need to careful now as we are approaching crucial resistance of 18000. So, price action at 18000 becomes very important. Acceptance above PDH or 18000 levels is bullish but rejection above PDH is not bullish. In fact we can plan for a short trade in case prices fail to trade above PDH but we need a proper entry and keep on trailing stoploss as shorting is opposite to a strong trend.
PDH (17985) and PDL (17785) are the levels to look out for from previous day’s range. Above PDH, we need to observe price action at 18000 levels which is crucial. Acceptance above 18000 is bullish. Below PDL, we can test VPOC at 17750 and below that is not good for buyers.
Trade plan for today:
Nifty is expected to open inside previous day’s range and there is not much clarity at open. I There is expected to be volatility at open and I would be looking at rejection above PDH to take a short trade. Also, in case prices fail to trade above PDH, I will look for a shorting opportunity later but absolutely no short trades if prices trade above PDH. Also in case of short trade, two things of concern – short trades are against trend and today is expiry. So we need to be cautious.
- No Short trades above PDH
- No Long trade below PDH or IB low later.
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.