We had a trend day in the markets today as the markets opened below value of Friday and kept selling through the day. Such types of days have an open at one end and a close at the other with a pull back high (low) in the afternoons.
To be honest, the day type was a bit difficult to call in the first session primarily because we had a larger than normal IB which in the majority of cases is a clue that the initiative activity may be over and one should be looking out for responsive behavior. So we were looking for some buying strength at 5426 and 5404 as I was saying on my twitter tab earlier.
However the charts never lie and the day's auction showed a declining VWAP and a declining dpoc which meant that all buying efforts were progressively snubbed out.
Let's have a look :
I work out of these charts and the same are available in the trading room. It shows a steady move down from the open of Friday and enough to keep us on the right side of the trade which in this case was down. That sell signal from Friday is already up 180 points.
The chart also is a good reminder to what I tell often- Follow the message of the market. Anticipating is good and looks great when it comes off, but betting heavily on anticipation without the market confirming the move is a stepping stone to disaster in your trading account.
We follow simple rules . Below vwap and value, it's the seller who controls and above value and vwap it's the buyer.
Here are the same rules applied to the bankNifty :
For tomorrow's session the pull back highs of 5399 and 10375 will be watched. This market will remain a sell till those levels are not taken out.