The BankNifty did a 400 point range on friday calculated from Thursday's close to Friday's close.
Ahead of the RBI on Monday the move assumes a lot more significance as a typical RBI day is known to give anywhere between 300- 600 points of move in the index.
Let's look at the profile chart of the BankNifty spot:
We followed the profile on the left of the chart through a series of charts the last of which was here – http://www.vtrender.com/content/filling
That Profile went from a double distribution to a normal one ending as a balanced structure.
As we all know longer and shorter term auctions have to either end in balance or in single prints.
When the big profile on the left was done we had a sharp move lower of about 600 points which ended up doing the middle profile shown from the 28th of August.
That profile looks sufficiently balanced though not a 100 % as it could have done with another day or two of auctions a bit lower.
The third profile on the right is created on friday and the single prints from 10408 at the open as well as the gap from the previous day's range are indicators that this is a new auction and hence on the chart it is shown up as a separate one.
Looking ahead this new profile is contained within the value area of the profile on the left marked in green and is likely to remain here for some more time.
The broader range could be signaling a move between 10300- 10800 now for the BankNifty.
The zone between 10780- 10725 on the spot is a low volume zone and the banknifty is expected to run into resistance should it get up here.
Lower down support is indicated by the POC of the balanced profile at 10500- 10525 which is also the area where the single prints appear.
As long as this level holds, one can play the bankNifty for upmoves. If it starts trading below then the open price of 10400 and the gap fill is a big possibility.
To sum it up watch 10500- 10525 on the spot for your bias for the next 300- 500 point move.