Nifty : The first day of the week saw a neutral performance by market participants as traders avoided undue risks ahead of a holiday.The lack of direction was visible in a poor performance by the orderflow as it showed the uneasiness amongst traders.
Off the trend day on Friday, the market was expected to consolidate and we had a slow session as well. The seller took control very early and drove the market down to 5021 just higher than the single prints visible in the middle of Friday’s profile as well as the highs from Thursday.A long string of single prints is always an evidence of institutional activity and has to be viewed against other single prints which have blue lines from the profile and are considered anomalies. Anomalies are always visited by the market. On Monday 2 such anomalies at 5044 and 5023 were covered by the market.
The neutral day is a market on hold . It will either stay it’s ground or move in one direction strongly.5070 and 5040 are the value areas of Monday which should be watched on Wednesday at the opening bell. As mentioned earlier, an exit of value and range from a neutral day set up the best trading opportunities.
Last week after the gap open based on central bank interventions, I had commented on vtrender on the prospect of the Nifty to digest the gains off the news. It’s never the news, but the reaction of the markets to the news which should be watched.
Here is a composite profile which shows the market activity for the three sessions post that big gap up.
The three day profile is a pure double distribution pattern, with volume nodes at 5058 and 4983.
From a DD pattern, if the market auctions higher that the high volume node above (5058), the bias will remain positive. Conversely the market should weaken below 4983 and again attempt the gap fill trade to 4885.
A third possibility which has very high probability in the current scenario would be a move in the middle of the profile to complete a D. This would imply a trading range between 4885 to 5070 for one to two sessions.
Monday’s profile in BN was a normal variation with buyer holding the advantage over the seller. The profile however was short and stout and conveyed indecision.
Large volumes were visible at 9104 and 9225.The heaviest volume of the series is visible at 9002 below and would have a bearing on the outcome of the series.