One of the key-reasons most traders fail to achieve consistent success is that they do NOT UNDERSTAND the game they are playing.
• They fail to understand the true nature of price
• They fail to understand the true nature of the game of trading
In other words… What we perceive as reality is not necessarily so. Often there is a deeper reality which we have just not seen. Or… That which is perceived to be reality, is actually an illusion. Analyzing the information of price, or in other words, analyzing the state of mind of heterogeneous group for a particular period, is the core of price action trading.
Weekly Price Action Analysis:
Weekly Price Bar Structure:
Price Action formed a Bullish Single Key Reversal Price Bar. Price made a low at 21403 by breaking the previous week low and finally closed at 22299 which is above the previous week’s close 21680.
Price bar Range:
The range of the current week price bar is 1017 compared to the previous week range of 981 which makes the current week price bar an average ranged price bar. Average ranged price bars represent active markets, where the price movement is normal when compared with the other price bars within market environment indicating moderate or normal volatility.
Position of Close:
The position of close is in the upper one third of the range indicating buyers have taken control over sellers.
Body Size:
The size of body (393) is lesser than the wick ((624) both upper and lower wick combined). The current price bar is indeed a bullish price bar but with a short body indicating weak bullishness as a result of lack of strength, due to reduced commitment from buyers. An alternate scenario with a smaller body also suggests a possible turnaround in the current direction of price. Since the body size is lesser than the wick a detailed analysis of wick, buying and selling pressure is required to determine who is in control? Buyers or sellers and to what extent?
Wick Size:
Analysis of wick is required only when the size of wick is greater than body. The size of upper wick is 120 and the size of lower wick is 504. The lower wick is 4.2 times the size of the upper wick indicating demand is greater than supply. The lower wick represents buying pressure and is of importance only when size of both wicks combined is minimum 2.5 times that of the price bar body. In the present scenario the size of the wick is 1.58 times of the body due to which a further analysis of buying and selling pressure is required.
Buying and Selling Pressure:
The current price action depicts that buying pressure (896) is greater than selling pressure (120). Buying pressure is 7.4 times of the selling pressure indicating buyers in total control. The strength is usually expressed in 3 degrees as Bearish, Strong Bearish, and Very Strong Bearish. The strength of the current price bar is Very Strong Bullish.
The Big Picture
Price Action formed a consolidation pattern LEDGE on 07.08.2020 (Orange Box). Again with the completion of the current week price action formed a second consolidation pattern LEDGE (Light Blue Box). The earlier price bar LEDGE 1 has translated itself into a RANGE. The current week price bar a Bullish Single Key Reversal, is within the range of two consolidation pattern. Currently price is trading above the median of RANGE and the above the two third level of LEDGE.
Expectation and Confirmation: With the current price action analysis we form a Bullish Expectation for the upcoming week keeping in mind the 1st resistance zone of 22669 (the upper resistance zone of Ledge) and the 2nd resistance zone of 23212 the (upper resistance zone of Range). The bullish expectation will be confirmed only when price breaks the high of the Bullish Single Key Reversal price bar at 22420. The Bullish expectation will be invalidated on price breaking the low of the Bullish Single Key Reversal price bar at 21403.
Daily Price Action Analysis
Daily Price Bar Structure:
Price Action from 18th to 21st August again formed a consolidation price bar pattern LEDGE.
Expectation and Confirmation:
With a consolidation pattern on a daily time frame we form a Neutral expectation and will wait for a valid breakout form the range. In the current situation price action can result into following 3 scenarios:
Scenario 1: If price continues to trade within the upper resistance zone of 22420 and lower support zone of 21629 we continue with a Neutral Expectation.
Scenario 2: If price breaks the high of the consolidation pattern then we form a bullish expectation. The bar which breaks the high and closes above the high of consolidation pattern will be referred as the “Bullish Trigger Bar”. After a bullish trigger bar, only when price surpasses the high of trigger bar the bullish expectation will be confirmed.
Scenario 3: If price breaks the low of consolidation pattern we form a bearish expectation. The bar which breaks the low and closes below the low of consolidation pattern will be referred as referred as the “Bearish Trigger Bar. After the completion of a bearish trigger bar, only when price breaks the low of trigger bar the bearish expectation will be confirmed.
Key Levels and Weekly Volatility
The key level of the current trend is at 21034 and critical level at 21027. The current weekly volatility remains unchanged at 2.4 compared to previous weekly volatility of 2.4. The probable weekly returns is of 525 points from the weekly close, with a measured move in increments of 254 points.
Trade Plan
The point of control of Bank Nifty Spot for the upcoming week is in the zone of 21911. Price staying above the point of control can find minor resistance in the zone of 22165 and major resistance in the zone of 22420. Price surpassing the major resistance at 22420 can further move towards the zone of 22673, 22927 and 23181.
Price staying below the point of control can find minor support in the zone of 21657 and major support in the zone of 21403. Price breaking below the major support at 21403 can move much lower towards the zone of 21149, 20895 and 20641.
Disclaimer
All trade ideas published here are for educational purpose only. All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
• They fail to understand the true nature of price
• They fail to understand the true nature of the game of trading
In other words… What we perceive as reality is not necessarily so. Often there is a deeper reality which we have just not seen. Or… That which is perceived to be reality, is actually an illusion. Analyzing the information of price, or in other words, analyzing the state of mind of heterogeneous group for a particular period, is the core of price action trading.
Weekly Price Action Analysis:
Weekly Price Bar Structure:
Price Action formed a Bullish Single Key Reversal Price Bar. Price made a low at 21403 by breaking the previous week low and finally closed at 22299 which is above the previous week’s close 21680.
Price bar Range:
The range of the current week price bar is 1017 compared to the previous week range of 981 which makes the current week price bar an average ranged price bar. Average ranged price bars represent active markets, where the price movement is normal when compared with the other price bars within market environment indicating moderate or normal volatility.
Position of Close:
The position of close is in the upper one third of the range indicating buyers have taken control over sellers.
Body Size:
The size of body (393) is lesser than the wick ((624) both upper and lower wick combined). The current price bar is indeed a bullish price bar but with a short body indicating weak bullishness as a result of lack of strength, due to reduced commitment from buyers. An alternate scenario with a smaller body also suggests a possible turnaround in the current direction of price. Since the body size is lesser than the wick a detailed analysis of wick, buying and selling pressure is required to determine who is in control? Buyers or sellers and to what extent?
Wick Size:
Analysis of wick is required only when the size of wick is greater than body. The size of upper wick is 120 and the size of lower wick is 504. The lower wick is 4.2 times the size of the upper wick indicating demand is greater than supply. The lower wick represents buying pressure and is of importance only when size of both wicks combined is minimum 2.5 times that of the price bar body. In the present scenario the size of the wick is 1.58 times of the body due to which a further analysis of buying and selling pressure is required.
Buying and Selling Pressure:
The current price action depicts that buying pressure (896) is greater than selling pressure (120). Buying pressure is 7.4 times of the selling pressure indicating buyers in total control. The strength is usually expressed in 3 degrees as Bearish, Strong Bearish, and Very Strong Bearish. The strength of the current price bar is Very Strong Bullish.
The Big Picture
Price Action formed a consolidation pattern LEDGE on 07.08.2020 (Orange Box). Again with the completion of the current week price action formed a second consolidation pattern LEDGE (Light Blue Box). The earlier price bar LEDGE 1 has translated itself into a RANGE. The current week price bar a Bullish Single Key Reversal, is within the range of two consolidation pattern. Currently price is trading above the median of RANGE and the above the two third level of LEDGE.
Expectation and Confirmation: With the current price action analysis we form a Bullish Expectation for the upcoming week keeping in mind the 1st resistance zone of 22669 (the upper resistance zone of Ledge) and the 2nd resistance zone of 23212 the (upper resistance zone of Range). The bullish expectation will be confirmed only when price breaks the high of the Bullish Single Key Reversal price bar at 22420. The Bullish expectation will be invalidated on price breaking the low of the Bullish Single Key Reversal price bar at 21403.
Daily Price Action Analysis
Daily Price Bar Structure:
Price Action from 18th to 21st August again formed a consolidation price bar pattern LEDGE.
Expectation and Confirmation:
With a consolidation pattern on a daily time frame we form a Neutral expectation and will wait for a valid breakout form the range. In the current situation price action can result into following 3 scenarios:
Scenario 1: If price continues to trade within the upper resistance zone of 22420 and lower support zone of 21629 we continue with a Neutral Expectation.
Scenario 2: If price breaks the high of the consolidation pattern then we form a bullish expectation. The bar which breaks the high and closes above the high of consolidation pattern will be referred as the “Bullish Trigger Bar”. After a bullish trigger bar, only when price surpasses the high of trigger bar the bullish expectation will be confirmed.
Scenario 3: If price breaks the low of consolidation pattern we form a bearish expectation. The bar which breaks the low and closes below the low of consolidation pattern will be referred as referred as the “Bearish Trigger Bar. After the completion of a bearish trigger bar, only when price breaks the low of trigger bar the bearish expectation will be confirmed.
Key Levels and Weekly Volatility
The key level of the current trend is at 21034 and critical level at 21027. The current weekly volatility remains unchanged at 2.4 compared to previous weekly volatility of 2.4. The probable weekly returns is of 525 points from the weekly close, with a measured move in increments of 254 points.
Trade Plan
The point of control of Bank Nifty Spot for the upcoming week is in the zone of 21911. Price staying above the point of control can find minor resistance in the zone of 22165 and major resistance in the zone of 22420. Price surpassing the major resistance at 22420 can further move towards the zone of 22673, 22927 and 23181.
Price staying below the point of control can find minor support in the zone of 21657 and major support in the zone of 21403. Price breaking below the major support at 21403 can move much lower towards the zone of 21149, 20895 and 20641.
Disclaimer
All trade ideas published here are for educational purpose only. All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
