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 Wednesday, Nifty opened just above previous day’s high with a small gap up and initiative buyers took control of the price from the start and moved it immediately to upside. After the initial 15 min, the momentum of bulls was not so strong for further up move but sellers were not able to take advantage of this bull’s exhaustion and could not even test PDH. Prices kept moving sideways for most part of the day and then moved up later to close at the high of the day forming NVD day up. The value area shifted upside and this indicates that bulls were in control but only concern is trade facilitation was not good, so it looks more like absence of sellers than strength of bulls.
What can be expected now:
As price moved with poor trade facilitation on upside, we need to see if there is a follow through buying. For that, prices should accept above PDH but in case prices fail to trade above PDH, we can expect some selling but then, we need to see if sellers can push the prices below PDL or not, else the struggle might continue. Today is an RBI event and weekly expiry , so need to be cautious and market will be volatile in second half.
PDH (17490), POC (17410) and PDL (17330) are the levels to look out for from previous day’s range. Acceptance above PDH we can test weak high 17530. Further acceptance above we can test weak high 17632. Acceptance below PDL we can test virgin POC 17180, Further on downside we can test swing low 17047.
Trade plan for today:
Nifty is expected to open near previous day’s high and there is not much clarity at open auction. We need to see if prices are clearly accepted above PDH and we can plan a long trade in that case but need to be cautious. Also, once prices are accepted above PDH, it should not come back to previous day’s range. In case prices fail to trade above PDH, we can look for acceptance below POC to plan for a short trade but there also we need to be cautious and trail stop loss. Prices can be volatile today, so in case of no good opportunity, its better to stay out.
- No long trades below PDH.
- No short trades 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.