Hi Traders,
Happy Diwali !!
May Goddess Bless You with health & Wealth !!
On the 6th of Nov, I wrote in my weekly blog on Bank nifty regarding neutral sentiments with point no.2 of the trade plan section is quoting how one should change her/ his psychology with a price " On the contrary, if price takes out the green line in both time frames then do not think you will see a rally rather it will be a trapping move. So the upside move will not be convincing at all. Please do not think I am sounding bearish . My sentiments change with price movement. I always see the market in a neutral way not biased any side. With the flow of price, I change my sentiments. That is why always work with stop loss." Here you can see the first line of the statement was sounding bearish as I was expecting a trapping move by bears but it was a genuine rally which travelled appx 1500points. in the next line of the statement, I clearly wrote I am neutral will go with the flow of price and that flow was on the upside by activating the taken-out condition of the green line. Why I wrote all these words because of hanging man candle it has the potential to give false breakout and trapping bulls provide close below the hanging man low. On the other side, I have seen many times in my experience, gives a good rally by failing the hanging man pattern. so when I see hanging man I become neutral and start to wait for a taken out condition, then flow with a price. Hope many advance level traders would find this new perspective of seeing the hanging man . The stock market is a game of changing sentiments then you will never go wrong. Never ever stick to one sentiment patterns clued their psychology in your mind but when they fail, it becomes tough to erase the impact of the pattern seen on your mind. That is why 90% of traders convert their failed trade into hope trade.

2. See a pink color circle is showing you the taken-out condition got fulfilled and yellow color arrow showing rally of 1500 points. So when you are neutral and move with the flow of price the chances of going wrong converted itself into a reward that is what the stock market is. Though I wrote slightly bearish bias in first-line but very much clear how to tackle this situation. Even the uptrend was going on last week I clearly mentioned in point no1. of trade section is quoting for your consideration. " See a pink color circle showing a hanging man pattern with harami cross which is not activated till yet but as soon as it gets activated by giving the close of next candle below hanging man candle and price fulfill taken out condition in both time frame of 15 min and 1 hour, then this uptrend will convert into a downtrend.
Here you can see uptrend will convert into downtrend when the next candle close is below hanging man low. when next day gap up opening happened clear indication of uptrend continuation. I every time try my bit to give you a crystal clear picture of the market. And prove with evidence from the real move. Setting the previous fig to compare with the current one.
Trade Plan For Next Week.

1. Now see a very important candle marked in a green circle. I my 15 years of experience, I found this formation of the candle after a long move is an entry point of bears. No candlestick book mentioned this candle, therefore no name is given to this formation. always remember when you see this formation after a long-run upside, the entry of bears, and later on, confirmed by the black colour up move as a test of supply. And see the price fell. I marked a blue line if it is taken out in both time frame 1h & 15 min then I would like to leave my positional shorts. This means those who are positional short this the condition to get out of the position. ultimately a big move can be seen upside when the green line is taken out in both time frames.

2. On the contrary, a red line is marked if it is taken out downside in both time frames then a fall can be seen. only very negative news will increase the momentum of this fall otherwise it will be soon over. price can be range-bound between the red and blue lines for next week. One has to book profit quickly on both sides of trades.

3. For new readers writing how taken out condition gets implemented. Taken out condition works in the two-time frame combination for daily( 4 hr + 1 day) analysis. Similarly, work for lower time frames is also a two-time frame combination. For intraday trades 1 hr with 15 min. For taken out condition price has to complete in both time frames. Aggressive traders can take that side position in a lower time frame with the stop loss of breached candle low. In both the time frames given line is breached by a candle that candle high is to be breached by the next candle and close should be above the previously breached candle. This is how taken out condition is being implemented.

Yogesh Vats

Disclaimer:- All trading positions should be taken from consulting your financial planner. This study is for educational purposes only.


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