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 (Gap up) above previous day’s range and prices were pushed up by buyers at the open but after IB range formation, prices consolidated near IB high. Later after rejection from IB high, sellers pushed the prices down below IB low back into previous day’s range and closed near the low of the day forming a NVD down day. This selling at the end was result of poor trade facilitation by buyers but the value area has moved up. So we can say that even though there was selling towards the end, the control is still with buyers and what we need to see today is whether these sellers can follow through on downside or not. Also, there is budget day tomorrow, so we can expect some volatility.
What can be expected now:
What we need to see today if the sellers who marked the prices down on Friday towards the end can follow through below PDL or not. In case sellers are strong, they should not allow the prices to trade above PDH but in case sellers fail to push prices below PDL, we can expect prices to move sideways to upside. In case buyers are strong, the prices should move up and accept above POC. This is what we need to observe today and take decisions accordingly.
PDH (17395), POC (17345) and PDL (17096) are the levels to look out for from previous day’s range. Acceptance above PDH virgin we can test POC 17620. Acceptance below PDL , we can test weak low 16860.
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 at open, I will plan for a short trade, otherwise I will wait for IB range formation and then look for a possible trade later. Acceptance inside previous day’s range and then break of IB high is not good for bears and we can look for a long trade later in that case.
- No long trades below PDL.
- No short trades above IB high.
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.