[Watchlist] Justdial Bounce Analysis

Like King Edwards VIII, I found my true love in Justdial. The stock adores price actions and also, is high beta. Anyways, Let’s analyze Justdial. The bounce chart has been plotted and we can clearly see the lower highs and lower lows in this perfect downtrend.

But, here are some points in interesting order -

The candle A, candle B and the last day’s candle show extreme bullishness in the middle of the day as bulls pulled the price above 300 creating wicks. So, an arbitrary gamble will be to buy when it falls again below or near 300, obviously, with the help of a lower time frame.

Anyways, here we can see the intraday chart of Justdial for the last 4 days (Starting from Candle B). It doesn’t generate any trade as per Bounce theory. It is a pretty sideways trend where you can bet to buy on the lower channel.

Scalping on Sideways Trend

As we can see, trading ranges allow us to use scalping strategy - counter-betting on the highs and lows of the trendline that is making the range itself. However, we can also see tripwires as marked as Break Down (BD) and Break Out (BO) where extreme loss can happen if stop losses are not followed very strictly.

But generally when Break out or Break down happens the next candle also has to be close outside the range to confirm the breakout or breakdown as valid.

So, Let’s replace the invalid Break Out and Break Downs as Fake Out and Fake Downs!

The problem with scalping is you need to have a very high rate of success in order to be consistently profitable as you can see one such range breaker move trades away a huge profit chunk if not properly managed!

Note - The Candle made at 9:15 should not be seen with much importance. Lower time frames always respect highly leveraged chaos made by intraday traders who can not be assumed to have taken any trade in the first few highly volatile minutes.

The Candle M as marked here is very interesting. It is not being counted as a Fake down because it came back up from the rejection area as expected. The distance of the rejection area from the lower range of the sideways trend is also low. Hence, It is pretty normal to assume that line as intraday buyer’s new stop loss. These small psychological aspects are what makes different perceptions of price action trading.

Speaking of such perceptions, it makes no sense in scalping the break downs and fake downs as we can see bullishness in the higher timeframe!
Umm... It sounds complicated more now. What is the plan then?

We have plotted the proper buying point which will also act as immediate resistance right now being a Swing high. It has also formed Inside Bar after a Higher Low in the last trading day which tells of indecision.

It can continue its downtrend the moment it breaks the low of the inside bar. But the downside looks very improbable as it is sitting on long term support. So, we may again see strong rejections creating wicks.

So, the current plan is to avoid any positional trade unless the “Proper Buying Point” triggers. But, We shall be looking for intraday long or short if the Inside Bar triggers or we get proper trades in the range of the sideways trend’s channel in the lower timeframe.

Comment:

Intraday Short closed at 271.2

Comment:

There is a notable fact here - It had a gap down. But it went back to touch our entry point. So, it triggered. This is an important and tricky condition.

Whenever there is a significant gap down, it has to follow a certain pattern. It has to touch our entry price, Otherwise, it should’ve been skipped. Here is the image of the intraday chart of Justdial in the aforesaid day with further notes -

After a gap down, Justdial went up to fill the gap when it crossed the black line. As we can see, the proper gap-filling would’ve done if the red line had been touched but it shied away making a pin bar (It is important to acknowledge that this type of event is a common occurrence.)

So, after that candle is formed showing rejection, the trade triggers here when the low of that candle is broken i.e the violet line. The psychological aspect is more important here. The rejection shows intraday’s bearishness.

Although this discussion is a broad example of price action which doesn’t fall under the current agenda, We shall be discussing such aspects as per needs.

Anyways, It hit its target!