Pre-Market Analysis: Nifty Future – 02nd Feb 2022

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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 Tuesday, price opened (Gap up) and buyers tried to take prices up in the start but after IB range formation, neither bull or bears were participating actively and there was lot of volatility due to Budget event. This was also exhaustion of bulls as bulls failed to follow through above IB high and after the event, there was a deep selloff which tested PDL. There was a huge responsive buying from PDL which took the prices back up above PDL and prices closed back again above IB high forming a neutral extreme up day with value area also shifting on upside. Now if this down move was inventory adjustment break, bulls should now take control and move prices on upside above PDH, so any acceptance above PDH is bullish. Rejection above PDH and then acceptance below POC is not good for bulls.

What can be expected now:

In Nifty , we need to see if bulls can follow through on upside or not. Failure to trade above PDH can result in a sideways to downside move in Nifty but if we continue accepting above PDH, there is no point looking for any short trade in that case.

PDH (17633), POC (17545) and PDL (17230) are the levels to look out for from previous day’s range. Acceptance above PDH virgin we can test POC 17800. Acceptance below PDL poor low we can test weak low at 17095.

Trade plan for today:

Prices are expected to open above PDH and I am bullish on market. But i will ignore any open auction trades if there is a gap up. In case prices test and reject PDH (OTD up scenario), i will look for a long trade. Else, if prices keep accepting above PDH, I will wait for IB range formation and then look for sellers exhaustion to opt for a long trade. In case prices accept below POC, I will look for short trade but no short trades above POC.

Some cautions:

  1. No long trades below PDH.
  2. No short trades above POC.

Disclaimer:

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.

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