Chart Patterns
How to Combine Basic Technical AnalysisTrade by Combining Basic Technical Analysis. How to enter in a trade by combining basic knowledge of Support/resistance and Candlestick patterns and Chart reading.
Elgi Equipments ELGIEQUIP - Positional Trading I have based my analysis on Stan Weinstein's framework on Weekly chart where price structure, 30 weekly MA, volume and relative strength (not RSI) play a role in analysing the trend.
Personally, I like stocks near ATH because it tells me that prior resistance has been broken. It is important for me to select stocks that have strong relative strength against a particular index such as Nifty Infra in this case (Elgi makes compressors and they are capital goods for industry) or Nifty 500 the broader market.
The area where price is moving up (marked with a green upward arrow) is defined as Stage 2 structure according to Stan Weinstein. After this, we see a Stage 3 structure marked with a black box. During Stage 3 structure, price is rangebound and this period can be for many weeks or months. Remember, this is where we lose TIME. And for traders (and also Investors), TIME is important. I have marked a breakout candle (in orange) and that is where I like to enter provided I see confirmation on volumes (marked with orange in the volume histogram).
Stan Weinstein says Positional Traders should ride the trend and exit stocks only when they start trading below the 30 weekly MA. He further says not to buy in LH LL structure because there is no way one can tell how far or how long can the fall be. See for yourself how often stock stays lower.
The breakout candle of 10 August 2020 is of importance. Note the volume expansion. Also note that retracement is till the mid point of the 10 August 2020 candle and stock does not fall anymore. The candles of 9 November 2020 and 7 December 2020 are also very important. The latter breaks prior pre-pandemic resistance. Around this time the Relative Strength of the stock starts outperforming against the broader market i.e. Nifty 500.
Analysis is easy on hindsight. What would I do if I were to take a buy call now?
I will go long only when I see a breakout candle (marked in orange) confirmed by Volumes. Because Nifty is near ATH and in Stage 3 structure, there are two things that might happen. It may again start a new Stage 2 structure or form a Stage 4 structure which is start falling from the box. Hence in a market like this, I would shift to the Daily chart, add a 50 Daily MA and if the stock breaches 50DMA and goes lower, I will exit 50% of my holding. And if it breaches the nearest swing low, I will exit completely- the candle of 27 May 2021 on Daily chart. This is a variation from Stan Weinstein's framework.
Disclaimer- This is not an investment or trading buy/sell advice. The purpose is to share knowledge and learn from the community. I am not invested in the stock as on date.
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Basics of Price Action | Multi Candlestick PatternsBasics of Price Action | Multi Candlestick Patterns | Basics of Technical Analysis
The best trades work almost right away.A breakout trade will work almost right away from the start, if the breakout happens with huge momentum and then you see Doji candles or hammer then there is a problem with follow-up. A bullish breakout must always be accompanied by a good follow up, else it cannot sustain. Bullish breakout needs good bullish candles, not Doji.
Note-As soon as you enter a breakout trade it has to work within 15-20 days.
If it does not move with huge momentum then exit it after 15-20days with whatever the result may be, don't wait for the stop loss to hit or for your target. The above rules apply only to Swing trade and breakout trading.
Inverse flag pattern in L&t finStock is in a down trend
considerable flag pattern formed
overall looks very bearish
Flag Pattern Identification | Moving Average | Entry Guessing chart patterns in Higher timeframes & then moving gradually to lower timeframes for Confirmation & Entry points.
Technical Indicators which I am using here is Moving average.
1. First looking at the weekly and daily timeframe, I confirmed that stock is trading above the Moving average. Also, there is an impulsive buying followed by some correction. This hinted towards a FLAG PATTERN.
2. To confirm the flag pattern and specifically the entry point, which will be candles breaking out the Moving Average line, I analyzed 4H and 1H timeframes.
3. Once I see a candle breakout at the Moving average line in an uptrend during a correction phase, I place my entry for BUYING.
** Setup stop loss and Target as per your own trading style**
Force Motors Inverse head & shoulder breakoutSimple trend reversal pattern identification.
Pattern preceded by Down trend
Pattern location is very important for pattern to workout.
here pattern is formed exactly at the breakout level.
So chances of pattern to work out.
Never follow patterns in isolation, combine other things with it.
Breakout candle is having a wick, so have a cautious approach.
Check BHEL Idea.
How trend reversal double bottom pattern worked out
Swing trading opportunityIt's a clear double top pattern there is a 70% chance that after a minor retracement the market will go down you can buy now or wait for the retracement to be done, it's up to you many big raders buy half their quantity at this point so in case if the market show a sudden move they won't be left out.
Common Stock Market Mistakes every beginner have facedCommon Stock market Mistakes every beginner have faced. I will add 2nd idea soon based on mistakes in trading journey.
