"At 5230 the market is one standard deviation away from this declining vwap line and the trade currently playing out is a normal reversion to the mean set-up"
We pointed that out on Wednesday at 11.50 am – http://www.vtrender.com/content/sellers-vwap-0
At 3.30 pm the market was near the mean point again for this sell-off.
Have a look at how this trade has played out all through the past few sessions:
From points 1-7 one can clearly see that the market has bounced back every time it touched the lower deviation line from the main vwap line in Orange.
There was little doubt that it would do so one more time particularly as OF had signaled a buy In Nifty on Wednesday at 5240.
On to next week, we have the railway budget on Wednesday, followed by the RBI meet on Thursday and finally the Union budget on Friday.
During such periods, it always pays to look at higher time frames and the role they are likely to play.
Here is a composite volume profile from the start of the year.
Today's move puts the NF back into the high volume region marked in the green rectangle.
When this chart was last put up on Monday, we had mentioned the low volume zone not able to facilitate trades below 5285. In the past 8 sessions, the NF has spent only one session in that Low volume zone and 7 in the current high volume area.
A trip to the upper end of the high volume zone should be the play, but the actual trending move should begin only when we cross over above 5430.
Till then it will remain a sideways move in this high volume region.