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, Nifty opened above previous day’s range and test PDH in start with OTD up but initiative buyers were not able to follow through to the upside. The responsive sellers took advantage and moved the prices back inside range to test POC where buyers again pitches in and supported the prices. For the rest of the day, prices moved sideways inside IB range and formed a non-trend day. But again value area has moved up and control is still with bulls.
What can be expected now:
There has been continuous non-trend days with value area moving up. Even if the value area is moving up, we need to see a good trade facilitation but buyers otherwise buyers are getting more and more exhaustion leaving sellers an opportunity to move prices down. As yesterday was weekly expiry, today can be crucial. So today, we need to see whether buyers are able to push prices above PDH or not. Any rejection from extremes or acceptance inside previous day’s range might facilitate a sideways to down movement which is not so good for buyers.
PDH (18303), POC (18250) and PDL (18197) are the levels to look out for from previous day’s range. Acceptance above PDH weak high18350 Below PDL, we can test the gap close levels at 18120 and below that virgin POC at 18085.
Trade plan for today:
I will be bullish on Nifty if prices traded above PDH but instead of taking a trade at open auction, I will wait for a good opportunity as I want to be sure that buyers are not exhausted. Also in case buyers fail to trade above PDH, I will probably look for a short trade with caution as it is against trend but I also need to see clear exhaustion of buyers before I take any short trade.
- No long trades below PDH.
- No short trades above 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.