Nifty Futures end on Friday with a strong bullish note. Profile Sentiment turned positive however indicator sentiment maintaining negative which brings the odds of sideways to downward markets. Call writers are still active at 11400 and 11500 strike price which puts an immediate EOD resistance at 11400 in Nifty Spot.
Here are two interesting and similar trading setups which help positional traders in spotting very high probability and very high risk-reward ratio using market profile. this tutorial explains how to understand the context of High probability trend exhaustion using short-term inventory conditions and the exponential trading odds with lower risk trade setups
Nifty Futures inventory went long to too long on last Friday. At the Monday open, trading confidence is initially low. Trading confidence is low even after the initial – 2 day breakout with a partial gap fill. However during mid of the day,, one timeframing against the Initial Balance direction is where exactly high confidence sellers started taking control and pressed the price towards the Prominent POC of control 10940 levels.
I guess Nifty is in a make or break zone as the higher timeframe range is getting tighter & tigher. The United States and China slapped tit-for-tat duties on $34 billion worth of each other’s imports on Friday, with Beijing accusing Washington of triggering the “largest-scale trade war”. Despite the negative news factor, Asian markets (China, Hang Seng) recovered the early losses and closed positive.
Nifty Futures trading in 10600 – 10900 range and this range is getting even tighter possibly 10700 – 10900 in the near term as the call/put writers are writing at tightly packed zones. When Comes to Nifty Futures Index short stops are hunted in a phase manner. And more short term stop clusters are in the zone from 10790 – 10850 levels. Short term sentiment maintains positive for last 5 trading sessions.
Here is one of my Signature trades using market profile and how one can look through the trade setup for a potential short covering rally especially when we are dealing with negative global emotions . On Wednesdays trading most of the Asian Markets are down due to the trade war tensions and the previous day US Markets slides to negative. The most interesting part was 4th July US markets are closed for Independence day.
High Volatile Choppiness is the name of the game being played in Nifty. Since 25th of May lack of serious buying and lack of serious selling is witnessed which is keeping the market in a range despite Chinese market crashing and emerging market currency crisis. Local currency USDINR too touched all time high and currently around 68.74
How do we understand that smart money is getting out of their shorts? and how the dumb crowd get trapped into it? Here is the high probable trade setup using market profile which explains the context of inventory getting short to too short and the potential risk in holding trade in line with the emotional players.
Yet another classical technical view on USDJPY as it comes out of the classical 200 Moving average (110.20) with a short covering. The Interesting part is that so far 7 attempts had made to close above 200MA since May 2018 all ends in vain. However current short-covering in USDJPY started with the speech of Peter Navarro, “one of President Donald Trump’s top trade advisors, said the market was overreacting to fears the administration would restrict foreign investment as part of its trade actions against China and other countries,” according to CNBC.
I prefer using classical technical analysis to get a perception about the markets, especially at higher timeframes. Here are a couple of charts on US Market NASDAQ Index (Daily 200 Moving Average Charts, Quarterly – Market Profile, Quarterly ADX Divergence, Quarterly Smooth RSI) with an interesting perception which indicates potentially overvalued NASDAQ charts with a greater mean reversion odds.
Nifty Futures is still not out of compression yet and continuing with the 10600 – 10900 range for July series. More frustration is likely among the trend followers and short-term direction index futures traders. Volatility is flip-flopping. It is always good to recognize this sort of tough game for any kind of directional players that will eventually reduce overtrading.
One of the reasons we use market profile is to understand the market conditions and how the other players are positioned and what kind of trade opportunity the market conditions provide and where most of the other people are likely to keep their stops. At times the inferred data points from market profile reveal very high probability trade setups with a very good risk-reward ratio. Here is the interesting chart setup from S&P 500 Futures(ES Mini Futures) and the reason why in a short-term S&P500 will fall 50-60 points from the current level of 2792.