Here is a chart of the BankNifty spot showing moves of the index in intervals of 30 minutes each from 20th of March to the close of trading on Friday 6th May.
BankNifty spot :
For purposes of clarity we have subdivided the chart into three zones according to the Steidlmayer distribution process. The three zones are the imbalance region A, which is the New IPM, the balancing of B region and the third region C which is the new imbalance move or the IPM as we call it here. Please note that the Steidlmayer processes 2 and 3 are actually included as one zone here as step 2 indicates start of balance whereas step 3 of the 4 step process is actually the end of the Balance process.
So we have a move in the BankNifty which on a larger Time frame has gone from imbalance to balance and back to imbalance. The question we need to ask is whether the imbalance has ended and whether we are in a new sideways move again or not?
For purpose of simplifying things further, I have given the value areas for each of the zones based on volume profile which tells us where the market developed 70 % of the Volume.
It is interesting to see from the chart that the down move had halted at the VAL of the Move A near 10662 levels and and the recent down move ( Move C) has matched the magnitude of move A with the highest volumes being distributed again in the 10880-10930 regions, which is the same as Move A
Coming to the current price, we can see overhead resistance now near 11315 spot, above which a 300 point move can be easily taken towards 11590/ 11635.
The zone of 11590-11653 if reached is a critical level and can push price lower to 11315 again or can result in a bigger drive back to 12000 if adequate buy volumes are present. Hence this level becomes like a stop and reverse for all traders across timeframes.
If the down move has to continue the bank nifty has to spend as little time as possible above 10880-10930 zone. Even in a case where the bank Nifty does that but fails to overcome 11315 then we can safely conclude that we are in a sideways market for the duration of the week.
Watch this index. It holds the key to how the Nifty would behave next week.