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 Thursday, price opened inside previous day’s range and sellers tried to push the price down but was met with a strong buying absorbing all supply and prices traded sideways for first half of the day. Sellers were unable to even test PDL and as a result of this exhaustion, buyers moved prices up in the second half to test POC which was near PDH. Though there was some selling in the end, that selling does not seem to be of much significance unless we move below PDL. The value area moved sideways inside previous day ‘s range and it was an NVD up day in banknifty.
What can be expected now:
There was a responsive buying in bank nifty which took the prices back near PDH after a low open. This indicates missing conviction of sellers. So, what we need to observe today is whether buyers can push the prices further above PDH or not. In case of clear acceptance above PDH, we can expect an upside movement. In case we fail to trade above PDH, we can expect sideways movement but I am very cautious on sellers until prices start accepting below PDL .
PDH (37910), POC (37410) and PDL (37180) are the levels to look out for from previous day’s range. Acceptance above PDH can take price further upside and acceptance below PDL can test weak low 36840.
Trade plan for today:
Prices are expected to open inside previous day’s range and there is no clarity at open auction. We need to observe the price movement and prices acceptance with respect to previous day’s range. In case price accept above PDH or fail to trade below PDL, I will look for long trades. Only in case, prices are accepted below PDL, I will not look for long and might look for short trade but with caution.
- No long trade below PDH.
- No short trades above PDL.
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.