Nifty and Bank Nifty- 4th Mar

It feels good to be posting here on Vtrender.

I want to thank Shai for the opportunity to add my inputs and would be happy to have your reactions.

If you see the charts above and understand the horizontal lines across the charts, you have rightly inferred that I am here to discuss Volume Profile analysis of the Nifty and the Bank Nifty.

These are 2 day charts, with the profile on the left denoting the price action from yesterday and the profile on the right of the chart is the action from today.

The price action in the Nifty today formed a traditional 'Inside day' ( well almost) and the value area was confined to yesterday's value area ( purple bars).Within the action of the day today, we had buyers stepping in to arrest the downward momentum at precisely the Value area Low ( VAL) and they took it back above value later in the day.

In the Bank Nifty( BN), buyers let the BN drift some 35 points below VAL, before stepping in to drive price back in value again.

Inferences for tomorrow ( 5th March):

Nifty : The day set-up is positive and buyers have showed their hand by stepping in to take price higher.We would be looking for a follow through tomorrow based on this action.If you are leaning on the bearish side a break of 5075, followed by a break of 5057 should set you up for some nice profits.

Bank Nifty : This chart is slightly less bullish than the Nifty.We have seen a shift in Point of Control ( POC ) slightly to the downside. So if you are bullish on this index, be quick to take your profits. If you are bearish, then a break of 8965, will confirm the price pattern on the chart.


I have asked Shai to include some resources on Market Profile on the blog, so I will be free to use some terminologies and ensure that you guys know it is not Greek and Latin !!

Nifty and Bank Nifty

One of our regular readers, Viren sent me these charts of the Nifty and the Bank Nifty.

I'll reproduce his message here:

As explained earlier, the purple lines are the value area and the yellow line is the POC which represents the highest volume of the day.Above value area buyers are in control and below value sellers..

BN was not a short except if it traded below 8440-8430 which was value area high from Friday. As you noticed that buyers came again at that level and took price higher.Had it entered value, it would have been a short.

In the Nifty, price entered value of friday and notice how it bounced off the POC.That was a good place to book shorts. Once it came above value again there was no looking back. A safe long was above 4994 and a short below 4880. 4994 was the Initial Balance, hence a cross above that was that Buyers were re-asserting. Conversely had it moved below VAH, we would have seen POC and VAL again.

See, if you observe the chart and listen to the message of the market trading is so much easier.

For tomorrow, the purple lines are the value area. Look to go long above VAH and short below VAL.

Cheers,


Well Done Viren...

I also use a lot of Market Profile for my swing trading and day trading requirements. What Viren is using are Volume Profile Charts, which look at the volume at each price point to fattom what the Buyer and seller are doing at any price.

I hope to add my own inputs in future posts..