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 previous day’s range there was some initative selling at start. but sellers were not able to push nifty further down and buyers pitched in and moved prices back inside range. Prices tested PDL but failed to move further up and for the rest of the day prices traded within IB range and below PDL. Though there were attempts to move prices upside. Day formed was neutral centre day and value area shifted down. So, even though sellers look like being challenged by buyers, the control is still with sellers.
What can be expected now:
We need to see which direction prices get accepted and trade facilitation in that direction to determine a trade. Prices trading above PDH is good for bulls and prices trading below PDL is good for sellers. There is no clarity if prices keep accepting within previous day’s range.
PDH (17723), POC (17615) and PDL (17500) are the levels to look out for from previous day’s range. Acceptance above PDH can test virgin POC at 17830 and further up weak high at 18100 Below PDL, we can test virgin POC at 17400 and further go below to test buying gap at 17265.
Trade plan for today:
Nifty is expected to open inside range and instead of immediately taking a trade, I will wait to see if there is any supply coming from sellers. In case not, I will take a long trade but only if prices accept above PDH. Similarly, I will plan for a short trade in case prices clearly accept below PDL. I am not going to take any open auction trade inside previous day’s range and also if prices keep accepting inside previous day’s range and fail to move beyond range, I will stay out.
- No long trades below PDL.
- 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.