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 Friday, Nifty opened just below PDH and initiative buyers pushed prices up and broke PDH at first 15 min candle and took the prices to test HVN of Wednesday. But, after IB formation. The buyers could not follow through and after a small consolidation, responsive sellers pitched in and took price back inside previous day’s range. Now, this was buyers control and correction till we trade above PDH but after prices start accepting inside range, buyers see to be giving up control which shows weakness or absence of strong buyers. There was buying from POC and prices closed near PDH forming NVD down day but value area has shifted up and that is why there is not much clarity on market today.
What can be expected now:
There was a rejection above PDH in nifty and we need to see if these sellers who rejected the higher prices can move the prices down further or not. So, we need to observe is there is a follow through below PDL or not but any acceptance above PDH is not good for these sellers. As there is not much clarity as of not, so in case of acceptance within previous day’s range we can expect sideways day and can look to stay out or take responsive trades at extremes.
PDH (17950), POC (17835) and PDL (17735) are the levels to look out for from previous day’s range. Above PDH, we can test poor high at 17985 and further go above 18000 level where we need to watch trade facilitation. In case of acceptance below PDL, we can expect price to test poor low at 17685.
Trade plan for today:
Prices are expected to open inside previous day’s range and there is not much clarity at open. Only in case of clear acceptance below PDL, i will look for a short trade and similarly only in case of clear acceptance above PDH, I will plan for a long trade. In case of price acceptance within range, I will look for a rejection of extremes to plan for a responsive trade if I get good and clear opportunity. If there is nothing clear, I will wait for IB range formation and then look at the IB placement with respect to POC and then look for trade opportunity. Later after IB range, I will be bullish above POC and bearish below POC.
- No long trades below PDH and later below POC.
- No short trades above PDL and later above POC.
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.