NIFTY ANALYSIS

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 Thursday, Nifty opened above PDH with a gap up and initiative buying pushed the prices upside without even testing PDH leaving a buying GAP behind. We expected a directional movement yesterday in our pre-market analysis and upside in case of acceptance above PDH and that is what happened. Nifty one timeframed upside for the entire day giving a big move on upside ending in a trend day with prices at new all time high. The only concern which I have is this reversal has happened too soon , that is 500 points movement in NIfty first on downside and then on upside in last 5 days giving rise to volatility. Hence, the caution on swing trades. For Intraday, as long as prices keep accepting above PDH, there is no reason to short the market.

What can be expected now:

With a big move yesterday on upside and prices making a new all time high, we need to see if bulls are able to follow through on upside making a new all time high today or they fail to do so. Acceptance above PDH for a longer duration can give another good move upside but failure to trade above PDH can give a sideways or even a down move in Nifty.

PDH, POC and PDL are important levels from previous day’s range. Above PDH is uncharted territory and prices can move up without major resistance upto 18000. Below PDL, prices can close the gap and below it, virgin POC can be tested. POC is also an important level inside previous day’s range and in case of test of POC, bulls will try to defend this level.

Trade plan for today:

Nifty is expected to open near PDH and there is not much clarity at open auction, so we need to wait a see where prices are getting accepted. I will be bullish on acceptance above PDH and will have sideways to bearish view if prices failto trade above PDH and will plan my trades accordingly. But what we should not do is to jump the gun and trade before there is good clarity in price action today as there are good chances of trap situation due to much euphoria in markets.

Some cautions:

1. No long trades if prices trade below PDH.
2. No Short trades if prices trade above PDH.
3. NIfty is again at all time high and Banknifty is short of that, so bullishness in banknifty is crucial for any further upmove in indices,so keep a watch at Banknifty.

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.