In my previous post I shared my observations with the expectations that the index will achieve higher levels in the coming days. Unfortunately, I had to take trades in the reverse direction, later in the week, in order to mitigate my losses. It is all part of trading and I need to be flexible in this profession. The stubborn will be blown away by the winds, but only the flexible will survive the storms.
Current observations: Below the level 10094, I would assume that it is a pattern which is under formation. I called it a PERFECT BAT because the B leg retraced exactly 0.5 of A leg; also the B-C projection at D comes out to be exactly 2 times; and the A-B-C extension at D is exactly 1.618 as a complemetary confluence. These are all traits of a perfect BATpattern.
For me the BAT would be in action below 10094. A conservative approach would be to wait till 10013 where completes and also 10000 could also act as a psychological support. But break of 10K would trigger stops for long traders and may attract new shorts. So I would call 10000-10094 as the key level to watch out for the next week.
The PRZ for the BAT falls at 9780, I would call 9780-9687 as a strong support zone below the 10K mark. If this holds, a bounce of the order of 38.2% to 61.8% can be seen ( which would be 10020 to 100169 resp.) The question of complete reversal from this zone should be left unanswered as of now.
Other Possibilities: It is possible that the 10094 holds and market rebounds from there. In that case, I would like to see the index above the red downtrend line in order to be . It is also possible that the market consolidated between the red and 10094 before giving any decisive move.
Cycle study: Market reacted before its 25 day uptrend cycle, so I expect some sort of reversal at the end of this cycle. But this time it could be an upward reversal. I ll have reassess the situation at the cycle completion.
So, my post has short term undertones, with the expectations of intermittent bounces in the market. For long term I am still but I need specific levels for that.
With a regret that I am not able to update during the week, I hope you guys will find this post useful and take your trading decisions with care.
Do hit the like button for better posts ahead.
Trade safe, stay healthy.
One thing that I would like to share with all my fellows is that no pattern works hundred percent BUT they are high probability when PRZ is at or near important s/r levels.
One can either trade it both ways or for reversals only BUT reversal trade is what these patterns convey us.
Enjoy the last few ours of this weekend :)
For confirmation I suggested to wait for price to breach the B level. That would signal that the C is done.
These patterns may work well in consonance with time cycles but many a time I have seen that some legs are faster timewise, that way they end up much earlier.
But it's good to study price action with time cycles to find high probability trade setups.