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 range near PDH after some struggle near PDH, sellers took the price down back inside range. After IB range completion, sellers took the prices below IB low but failed to follow through downside and there was responsive buying which pushed the prices back inside IB range and continued moving up the prices above PDH. In last hour, some strong responsive sellers entered near 17500 levels and pushed the prices down back inside IB range and closed near IB low. So, the entire day was struggle between buyers and sellers which might continue. The day closed forming neutral extreme down day but value area shifted up. So, there is not much clarity on who is in control as of nowand we need to see if the responsive selling that came at the end yesterday can follow through downside or not.
What can be expected now:
Today, we need to see whether responsive sellers are able to further follow through on downside or not. Acceptance below PDL can give a continued down move but any rejection below PDL will not be good for sellers because that would mean there is a support from buyers and the struggle between buyers and sellers will continue. Any rejection from extremes or acceptance inside previous day’s range will facilitate sideways move. Today is also expiry, so need to be cautious
PDH (17495), POC (17335) and PDL (17238) are the levels to look out for from previous day’s range. Acceptance above PDH we can test poor high 17650. Acceptance below PDL we can test Trend VWAP 17100 and further down we can test swing low 16800.
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 buyers are coming. In case not, I will take a short trade but only if prices accept below PDL. I will plan for a long trade only in case prices clearly accept above PDH. I am not going to take any open auction trade inside previous day’s range and if prices keep accepting inside previous day’s range and fail to move beyond range, I will probably stay out.
- No long trades below PDL.
- No short trades above PDL.
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.