WHAT IS A CHANNEL PATTERN ?CHANNEL PATTERN :- It is nothing but a formation of two almost parallel lines between which the stock oscillates.
Channel can be of 3 types : 1) Horizontal Channel 2) Rising Channel 3) Falling Channel
It is a constant fight between bears and the bulls and victory is decided by the breakout or breakdown of the channel pattern.
Bulls wins the fight if breakout occurs , bears wins the fight if breakdown occurs.
When fight is over, the stop loss of other team is hit hence we can see a very strong move after the breakout or a breakdown.
I have explained everything on the chart itself but here is one tricky point which i would like to again repeat. :-
When a stock fails to touch the either of the line , there is a possible chance of breakout on the opposite side. ( as clearly seen in the chart breakout took place on above side when stock didn't touched the support line )
In above scenario bulls were more strong as they didn't let the stock move towards the support line, bears lose hope and finally breakout took place.
Another secret point i would like to share with you all :-
When stock gives a fakeout (breakout + moving back into the channel ) there is a possible chance of breakdown on the opposite side.
and When stock gives a fakedown (breakdown + moving back into the channel ) there is a possible chance of breakout on the opposite side.
I have shared many channel pattern stocks in my previous analysis , feel free to watch them for better understanding.
Community ideas
TOP/BOTTOM REVERSAL CANDLE PATTERNSHi
Its been a while since my last post. In this post I have represented selective candlestick reversal patterns.
In a candlestick, "body" represents the distance between candle OPEN and CLOSING price. Whereas "wicks" represent the entire range of the candle from TOP to the BOTTOM.
In most of these patterns only bodies are important. There are no conditions for wicks unless specifically mentioned like in abandoned baby star and (first two candles of) shooting star pattern. In an abandoned baby star pattern the wicks of the second day should not overlap with the wicks of first and third day. But there can be wick overlapping in morning and evening stars where the condition is for bodies only.
Similarly in shooting star, the second day should not overlap with the first day (not even wicks) whereas the third day may have some overlapping.
One should always try these patterns with some sort of confirmation in the form of volume or overbought/oversold scenarios etc. While taking a trade based on these patterns one should follow money management and trade management principles.
I hope this post will update your knowledge in one way or the other.
Do not forget to like and comment (for any doubts) to encourage writing on trading view.
Regards
JJSingh
Bullish RSI Divergence -A case study and future recommendationRSI Divergence refers to the deviation of RSI with respect to price. Even though the price may be going in a set direction (say making lower lows), the RSI could go in a completely different direction (higher lows). RSI is a clearcut indicator of buyer strength or buyer accumulation at a specific given time and price. An RSI Divergence generally is strongly related to change in trend.
RSI Divergence can be of 2 types: Bullish and Bearish. Here I shall discuss about Bullish RSI Divergence. In case of Bullish RSI Divergence, the price makes a lower low (in a downtrend) while the RSI makes higher lows (a sort of W formation). This shows that even though the price is dropping, the buyer strength and accumulation is increasing.
Please refer the image above for visual example.
How to trade?
In case of bullish divergence, one should go long with a SL below the low of the present price.
In the present case, one can go long in Amaraja with a SL of 660 and for a target of 800-850
nifty is showing flag and pole patternFlag and pole is a bullish pattern. I it breaks the channel upside stock price makes a new high. But if it breaks the downside then it will no good breakout.
How flag and pole pattern work:-
Flags are areas of tight consolidation in price action showing a counter-trend move that follows directly after a sharp directional movement in price. The pattern typically consists of between five and twenty price bars. Flag patterns can be either upward trending (bullish flag) or downward trending (bearish flag). The bottom of the flag should not exceed the midpoint of the flagpole that preceded it. Flag patterns have five main characteristics:
1.The preceding trend
2.The consolidation channel
3.The volume pattern
4.A breakout
5.A confirmation where price moves in the same direction as the breakout
Bullish and bearish patterns have similar structures but differ in trend direction and subtle differences in volume pattern. The bullish volume pattern increases in the preceding trend and declines in the consolidation. By contrast, a bearish volume pattern increases first and then tends to hold level since bearish trends tend to increase in volume as time progresses.
Price Action with RSI and MACD - Trade with ConvictionFor the purpose of explaining the combined use of these indicators,
I have taken the example of TCS - TATA CONSULTANCY SERVICES, which recently gave a clear breakout.
Know your Lines! - By joining the recent highs and recent lows of a share price, we can identify if the share has a well tested Support & Resistance or not. I prefer those with a clear defined pattern simply because all traders are looking out for these levels and there is a pretty good chance they will hold good, if not, you will know its time to exit.
Catch the Support! - The key to any exchange profit is BUYING AT A LOW and SELLING AT A HIGH. While it might sound obvious, majority of people lose out because they FOMO in at a HIGH and then Sell at a Low to cut losses. Classic Failure Strategy. It is pretty normal if a stock is all abuzz in the market, but do not enter it based on the buzz, check if its already too late or not. If at all, buy at a pullback at Fibonacci levels 0.68 or 0.50 ( Higher Success Rate levels )
One Eye on the MACD! - What makes an Indicator exceptional is the number of people using it. RSI, MACD, STOCH are like the biblical indicators which you certainly want to check before taking a position. When the blue line of MACD cuts the signal line from below, and the price is around its support, chances are you will not repent going long.
RSI is your best friend! - RSI is very crucial to avoid buying at a high. When it is above 70( I prefer 80 ), it is better to wait for a pullback. In a bullish market, it usually bounces back from 50, but again it differs from share to share. Identify its key support and a bounce from that level around the price support when MACD is bullish, means its a good set up for a Long Position.
I also prefer to watch out for RSI and MACD divergence to see the momentum of the price. If the RSI or MACD is making lower HIGHS while the Share Price is making Higher HIGHS, it means the momentum is weaking and one must watchout for a nice pullback.
To summarise, Identify the Support and Resistance, Check if MACD has turned bullish when the pricce has pulled back to its support, Check if RSI has bounced from its support and preferably above 50 ( It means bulls are in control ). If everything checks out, it should be an ideal long setup.
I hope you take back something from the explanation, This strategy has almost everytime worked for me. I hope it does for you too.
Keep Learning :)
3-Tricks : Where to start Elliott Wave counting on the chart? I get a lot of questions about Elliott Wave but a particular question often received from the followers:
Where to start wave counting on the chart?
How do I begin/start wave counting on the chart?
How do you do Wave Counting?
I’m going to introduce working 3-tricks which are used by me while establishing Elliott Wave Counting on a chart. These are my steps/processes or tricks that can help you to start counting waves.
-----------------------------------------------------------------
T rick 1 : Begin with an Extreme High and Low
-----------------------------------------------------------------
Key thing: you can actually begin the wave counting over the Extreme Low or Extreme High . It doesn’t matter if you start from extreme low or high. I am going to start Impulsive Wave Counting from Extreme Low in the middle of 2001.
The Wave Counting is quite simple on this chart with Wave 1,2 and nice acceleration in wave 3 that moves more confidently, wave 4 pullback and five-wave advance impulsive again. Now corrective phase, flat A, B, and C correction. This is a very easy and clear chart to identify wave counting.
-----------------------------------------------------------------
T rick 2 : Recognize the Pattern
-----------------------------------------------------------------
Just simply ask yourself “Do I recognize the Pattern?”
The answer is NO, then Okay
Next, ask yourself, Do I see a motive or corrective wave?
Elliott Wave classification in two phases, Motive, and Corrective phases. If it’s a motive-phase (wave 1,2,3,4 and 5) then, you have two patterns to work with:
1. Diagonal and,
2. Impulsive waves.
Suppose to, its Corrective-Phase (A,B, and C) then, you have 3 patterns,
3. Flat,
4. Zigzag and,
5. Triangle.
This is a counter-trend move(Corrective Phase) having Zigzag Pattern A, B, and C.
-----------------------------------------------------------------
T rick 3 : Start in the middle and move forward
-----------------------------------------------------------------
I don’t know what is going on but, in Aug 2013, the price moved 201 points from 69 to 271 which is a very strong upward move in a short period of time . This is a clean and clear sign of the 3rd wave .
If this move is Impulsive wave 3 then prior swing low can be labeled as wave (2) and prior swing high can be labeled as wave (1). Basically, it is Wave (1), (2), 1,2,3,4, and 5, (3), (4), and (5) motive phases.
More often, we may see gaps and price surges in a short period of time in Wave 3.
DON'T WORRY IF YOU ARE NEW IN WAVE ANALYSIS OR ELLIOTT WAVE. I CAN HELP YOU.
7 Phases of stockI believe, there are no bulls and bear in the market, there are just stock operators. These operators are the people/institutions with the big money and resources to take stock from point A to B and then back to A.
Read below in your free time to understand, how operator runs stock, trap retailers & how they generate profits. And in the whole process, how and when retailers lose their hard earned money.
Phase 1 - Pumping
In this stage consolidation happens, the longer the consolidation time frame the better stock will move.
Phase 2 - Increase in OI
If the stock is in Derivatives then they will buy calls, futures & short puts before Bull Run.
Phase 3 - Breakout
Buy with the huge volume for a day or two, to push stock beyond resistance zone. This is the phase when every financial advisor generates call for retailers and this is the phase when retailers get their 1st loss because of phase 4.
Phase 4 – Shakeout (Dump in small quantity)
Now the operator dumps stock in small % of quantity bought and this is the phase where they hunt for retailers SL.
If someone bought shares for Swing trade (For 1 or 2 weeks time frame), then there SL will get triggered first. Swing operators usually view charts in 2 hours timeframe. These people usually keep their SL of certain candle low or below VWAP or some pivot point or maybe some other indicator (1st mistake retailers think that the operator is stupid & doesn’t know how retailers think or where they keep their SL). Definitely thinking that we can outsmart these people so easily is the biggest mistake retailers make.
If someone bought shares for short-term duration (Less than 1 year or usually 3 to 6 months) then there SL will be triggered next because there SL will be somewhere in the consolidation phase depending upon the risk appetite. These retailers usually view charts in 1 Day time frame.
In this Phase operators cover the interest cost and make small profit on the amount invested for so many months.
Remember depending upon the market condition like during Covid Fall recovery when free lunch was getting served to all retailers operators skip this phase.
Phase 5 – Stock Rally (Bull Run)
Again breakout, in this phase small institutions or investors enter into the stock or average out their buying.
Now the retailers who already lost their capital in the stock will not enter because of fear or hate from the stock (Yes emotions play an important role in the market).
In this phase small institutions, investors, retailers buy/sell stocks and book small profit & losses. Definitely losses are booked by retailers who have bought shares without research and are gambling with their money.
Phase 6 – Stock Dance
Operators will make stock dance for few days to generate retailer’s interest for quick 5 to 15% return and trap some on the higher price.
Phase 7 - Dumping (Bear Run)
Before dumping they will again go long on put & short futures/call. Now those who have bought shares for Swing will book small losses & short term/long term retailers are gone because stock sometimes takes years to come back on the buying price. In this phase retailers won’t even get the time to exit from the stock.
In the stock market there is no lift. When stock goes up, it takes the stairs (Up-Down-Up), stock gets tired, it rests and then again starts it journey & when if falls then it is always jump from the terrace (Free Fall).
In this whole process, Operators, small institutions or investors generate good profit, doesn’t matter whether it’s going up or down they make money and retailers lose money if not in 1 stock then in another.
Now the question is how a retailer can save themselves from these sharks, who are there to take pound of flesh and how can a retailer take profit from their jaw.
Follow this 3 Step process to get success in the stock market.
1. Knowledge & Setup – Get detailed knowledge of all the instruments & major indicators available in the market. Create your setup, decide your time frame, calculate your risk appetite and back test your system.
2. Research – Do extensive research on the stock, decide your entry, SL & exit strategy before investing in any stock or instrument. This research can sometimes takes days or weeks to find the right entry and if your entry and timing is right then 80% of the battle is won.
3. Disciple – Trade like a robot & never allow your emotions like fear & greed to overpower you. Know when to average, book loss and take profit.
Without mastering these 3 steps one cannot make a profit in the stock market.
Remember without these 3 steps you will just bleed more & more in the market. Don't be a bull or bear, be a opportunist (Be an Eagle).
How to make a winning trade using pennants
A pennant is a small symmetrical triangle that begins wide and converges as the pattern matures (like a cone).
Here is an example of IEX.
The company has declared a good set up of numbers on 22nd July.
Profit after tax is up by 48%
Sales are up by 36%
The price is now hovering near the previous Resistance which now acts as a support
Tight price range near the support level. Look at the small candles.
Price goes up with rising volume on 23rd Aug.
Any pattern may falter depending on the overall market condition. So one should always keep a stop loss. :)
Hope you liked the idea. Happy trading.
WaveTalks-Nifty-Bearish Bat Harmonic Pattern at 16665This video discussed a bearish harmonic pattern that might be quietly sitting & hiding in the price structure if unfolds exactly holding below 16701.85 then the downside support could be 16510-16530 / Below 16500 for 16370-16390.
-----------------------------------
Last Nifty Video Idea
-----------------------------------
Hope you enjoy the video. Good Night!!!
Helpful Questions to Ask Yourself.The quality of our life depends upon the quality of the question we ask.
I think it's the same with trading also, successful traders ask better questions, and as a result, they get better answers. They get answers that help them to know exactly what to do in any situation to produce the results they desired.
Below are the 5 questions that will help you to stay focused and will make sure you do the right things.
1-Did I get in before the market broke?
One thing traders do that hurts them is to anticipate breakouts that never amount to anything. Instead of waiting for the market to break, they rush in to buy when it is at the top of its resistance level, hoping for the breakout. You shouldn’t anticipate a breakout every time the market approaches the support or resistance area, but you should be prepared to act if it does.
2-Am I getting in too late?
Suppose a breakout happens with a huge candle showing a 6-8% move. We always feel that if we don't act immediately, we could miss a great trade. It’s not always easy for a trader to walk away from a tempting trade, but this is the difference between a high probability trader and a low probability trader. You will be better off missing a few good trades while removing out the mediocre ones as you wait for the trades that have a higher probability with a better risk/reward ratio.
3-Did I use volume or any other indicator to see if the breakout was a high probability one?
To increase the probability of a breakout trade working, one can do a few things. By looking at different time frames to see the market more clearly, adding indicators such as the ADX or stochastics to time trades better, using volume to see if a move is substantiated, or adding filters to keep from rushing into a trade, one can improve the odds of capturing a breakout.
4-How much room does it have to go?
When a market breaks out of a trading range, a trader should try to estimate the potential move so that he can measure the risk if the trade goes sour. Without a good mix between the two, no trade should be taken. It doesn’t make sense to make a trade with a 100rs potential profit but with a chance of losing 300rs. You need to have realistic ideas on how much each market or stock can give you or cause you to lose on a trade. Use the size of the previous wave, range, or congestion to measure the next move.
5-Should I wait for a retracement?
By waiting for the market to test the old resistance line at Point Y one can make a higher probability trade than by chasing it at point X.
By waiting for retracement you can trade with a better risk-reward ratio.
Sometimes when the volume is strong, the initial move can be stronger and the chances of it retesting the breakout level are diminished, and so one has to let go of that trade. Your goal should be to take the trade with a better risk-reward ratio.
Short Summary
1-Be prepared to do something when the market approaches a potential breakout area.
2-Use other indicators to help determine the chance of a breakout working.
3-Use the size of the previous wave, range, or congestion to measure the next move.
4-If the current R: R is good then enter & if not then wait for the pullback.
What is a Symmetrical Triangle Pattern?The Symmetrical Triangle is usually a continuation pattern. It represents a pause in the existing uptrend after which the original uptrend gets resumes. A breakout from the upper trend line marks the continuation of an uptrend while a breakdown from the lower trend line marks the start of a new bearish trend . This pattern is also known as a wedge chart pattern.
How does Symmetrical Triangle Pattern Work?
Phase 1 : Existing Uptrend
When there is an extreme demand in prices there is an uptrend. It continued as the demand increases.
Phase 2 : Pause
When demand is equal to supply the there is a pause in an uptrend and investors start to book profits here. As prices consolidate it forms converging trend lines . As there is equal demand and supply investors buy on the lower trend line and sell on the upper trend line . Which results in forming a Symmetrical Triangle Pattern .
Phase 3 : Uptrend Continuation
After demand matching the supplies when there is when buyers are again interested to buy demand increases. Which results in breakout! And the continuation of the uptrend.
Role of Volume:
Volume plays a major role in a symmetrical triangle pattern . When in an uptrend the volume is quite higher. In the second phase, the volume starts to diminish due to equal demand and supply. And again on the breakout, the volume surges. Volume with Breakout gives a good indication of a successful uptrend.
Above Chart Explanation:
This is a 4H chart of AXSUSDT we can see it's in an uptrend previously with good volumes. Now after successful uptrend prices consolidate with diminishing volumes. And after it, there is a breakout with above-average volumes. And then the uptrend continues.
Conclusion:
Symmetrical Triangle Pattern is a continuation pattern. Which on upper trend line breakout can give a potential bull move and when on lower trend line breakout gives a possible bear move.
Comment your thoughts on Symmetrical Triangle Pattern down below.
Disclaimer:
This is just an educational post never trade just any pattern. And please do your research before making any trades.
PS: We are again publishing this for our Indian audience.
Happy Trading!
How to Execute the Trend trading system?Look for Low risk, High reward, and High Probability setups. – Richard Weissman
Scenario
Many traders get destroyed by fighting the trend, insisting that the market is due to reverse itself or they try to chase the market. They may try to catch short-term countermoves in hopes of making a few quick points, or they may always look to catch tops and bottoms in hopes of capturing the big moves. All these traders end up trading against the longer-term trend and against the odds.
How to find low risk, high reward, and high probability setups?
Use of Trend Following indicators for High Probability trading
A-Use of Moving average.
If you just jump into trades because the market is trending, you will be guilty of chasing the market.
You have to remember that the market will never go in one direction nonstop, the market typically congests or retraces after a strong move.
When the market is trending and you are looking for a place to get in, wait for it to retrace to one of the moving averages or trendlines. When the price is just riding on the moving average or trendline, your downside risk is smallest because you know you will be out as soon as it breaks the line.
B-Use of ADX (only for conformation)
The ADX does not tell you the direction of the trend; it only tells you if there is a trend and measures how strong it is. On its own, the ADX lags price action and is not a great indicator, and so one should not use it to trigger trades. Instead, it should be used as a way to get confirmation of whether the market is trending or choppy and how strong it is .
The level between 20 and 30 is considered neutral. The higher the level, the stronger the trend. When it is rising, one should trade only in the direction of the trend. When the ADX is below 20, you can consider the market to be choppy and range-bound, and a trending system will not work well, resulting in whipsaws.
Things to Remember while Trading with the Trend
1. Know what the trend is.
2. The best trades are made in the direction of the trend.
3. Assume that the main trendline or moving average will hold.
4. The longer the moving average is, the better it defines the trend.
5. Wait for the pullback.
6. Don’t chase the market.
7. Don’t fight the market.
8. Even in the strongest trends there should be some retracement.
9. The closer the market is to the trendline, the better the risk/reward ratio is.
10. Use ADX to determine the strength of the trend.
11. Higher the level of ADX, the stronger the trend, below 20 consider the market to be choppy
12. Hold trades longer in a strong trend.
13. Wait for confirmation of a trendline breaking before reversing position.
14. Know where the Support levels are.
15. Place stops outside the Support levels.
Closing Words- A successful trader will trade primarily in the direction of the major trend, waiting for retracements to get in.
How to buy dips?In this video I talk about how we can find good buying opportunities when the markets are witnessing correction. I'm using 10,20,44 Exponential Moving Averages on my chart along with RSI(14) indicator. On the screener we are looking at stocks which have Market cap greater than 50 Billion & sorting the 3 month performance from high to low. The rationale behind this is identifying stocks with good momentum.
P.S. Please pardon me for my voice, I'm down with fever and tried my best to not cought & record this video.
How to find a High Probability Trade?A high probability trade is a trade that has a greater chance of success than a regular trade.
So, how can you find these high probability trades?
There are a few things that you can observe to find that golden confluence of various important things such as a support level, demand zone, Fibonacci level, moving average, volume, RSI, etc. The confluence zone can be a combination of any of these things.
In the example above, you can notice the following things:
1. The market structure is bullish before the breakout, which is evident from the formation of higher highs and higher lows.
2. The price is consolidated in the rectangle/parallel channel for a good amount of time.
3. As soon as the price reached the previous support level, the selling pressure started to decrease.
4. When the price touched 200MA/EMA, the buyers stepped in and there was a good buying.
5. The 0.618 Fibonacci level also acted as a support and overlapped with the 200 moving average.
6. The buying pressure can be seen by an increase in the volume in the last few sessions before the breakout.
7. When the price breaks above the previous major resistance with a massive bullish candle, there is a massive volume expansion.
8. We always look for some reversal or neutral candlesticks in the confluence zone. In the chart above, at the point of interaction with the moving average and the Fibonacci level, we can see the formation of hammer candlesticks and spinning top.
High Probability trade checklist:
1. Market structure
2. Consolidation before the Breakout
3. Support-Resistance levels
4. Supply-Demand zones
5. Location of 200MA or 200EMA
6. Overlap with a Fibonacci level
7. Candlestick pattern and the size of candles
8. Volume expansion
You can read and revise this post until you master the concepts. I hope you find this post useful. Also, if anyone is interested in getting a PDF version of this thread, then you can message me, I'll provide it.
Disclaimer: This is NOT investment advice. This post is meant for learning purposes only. Invest your capital at your own risk.
Happy learning. Cheers!
Trade what's happening...not what you think is gonna happenAs soon as we see a breakout on the chart we form a basis ( or have a belief ) that the stock will burst and go upside.
We should not try to predict the market. Instead, we should wait and let the market tell whether the breakout is false or true.
You can crosscheck with other indicators. I personally use PRICE ACTION data i.e. after breakout the upper trend line previously acting as resistance now should act as Support.
Risk management - Enter 30% position at breakout, if the trade fails then your loss will be only upon 30% position. If the price respects the upper trend line then you can execute your remaining 70% position.
There is a big difference between predictive technical analysis and reactive technical analysis.
Predicting is trying to forecast where prices will go in the future and taking trades based on that belief.
Reactive trading is based on taking a trade after a signal has indicated the beginning of a trend.
The biggest leap to profitability comes when we stop taking trades based on what we think should happen in the market, and instead learn to trade signals that react to what is happening.
Note - The market doesn’t care about your opinion. It will go where it wants to go based on all of the participants’ actions. Get in the habit of going with the flow, and avoid trying to predict where the flow is going.
Hindustan Copper Falling wedge pattern & Bullish kickerFalling wedge pattern ( black lines ) breakout.
The falling wedge pattern is interpreted as both a bullish continuation and bullish reversal pattern which gives rise to some confusion in the identification of the pattern. Both scenarios contain different market conditions which must be taken into consideration.
The differentiating factor that separates the continuation and reversal pattern is the direction of the trend when the falling wedge appears. A falling wedge is a continuation pattern if it appears in an uptrend and is a reversal pattern when it appears in a downtrend.
Here it is appearing in uptrend. Hence continuation pattern.
Continuation or (Reversal) Pattern:
1.Identify an uptrend or (downtrend)
2.Link lower highs and lower lows using a trend line. The two lines will slope downwards and converge
3.Look for divergence between price and an oscillator like the RSI or stochastic indicator
4.Oversold signal can be confirmed by other technical tools like oscillators
5.Look for break above resistance for a long entry
Key points to remember:
1.Identification of the trend is crucial
2.Both continuation and reversal scenarios are inherently bullish
3.Both patterns present favorable risk to reward ratios as they generally precede big moves
Here is how you identify a bullish kicker:
1.The pattern starts with a bearish (red/black) candle
2.The second candle gaps to the upside, and opens above the previous day’s close. It continues straight up and ends as a bullish candlestick.
3.The gap should not be filled by the wick of the second candlestick, but be left untouched. In other words, the candlestick has a tiny or non-existing lower wick.
The pattern occurs after a downtrend, it instead might be a sign that the market has gone too far, and is about to revert. Here the bullish kicker becomes a sort of reversal pattern.
The first candle in the signal continues with the current trend, moving downward, but then a major event causes the second candle to gap up. The price bursts upward with bullish enthusiasm. Thus, the Bullish Kicker candlestick pattern portrays a strong change in investor opinion. Not only is there a bullish candle following a bearish candle, but the strength of the switch resulted in a gap between the two candles.
The Bullish Kicker signal often occurs after a major surprise in the news that is announced before or after market hours. Something drastic has happened, causing a great shift in investor sentiment, and a reversal will inevitably follow. The larger the gap between the two candles, the more significant the signal.
Combining chart patterns with other technical indicators wave out any false signal if generated. Therefore adding any one of the other indicators like Volume, Stochastic, RSI, MACD support etc. with chart patterns, one can further enhance the probability of the pattern to happen.
What is Inverse Head and Shoulders Pattern?Inverse Head and shoulders Pattern is the mirror image of head and shoulders pattern.
Read about Head and Shoulder Pattern here:
Inverse H&S Pattern is bullish reversal pattern. Signals the traders to enter into long position above the neckline.
Volume play a major role in both H&S and Inverse H&S Patterns. Usually the spike in volume on breakout is considered as a great signal for bullish entry.
Again a suitable target can be obtained by measuring the distance between head and neckline of the pattern and using same distance to project the target .
After the neckline breakout there is also a probability that prices can be retrace again to neckline due to lack of demand . Prices can only rise if again there is more demand which will lead to bullish uptrend.
Also if the neckline slopes slightly upward that is the sign of greater market strength thus gives further conformation to go bullish on Inverse H&S Patter .
Let us know what do you think about Inverse H&S Pattern? Please comment your views/doubts!
As always nothing works every time in
markets. Please do your research before taking any position. This is only for Educational Purpose.
We are covering all Major Reversal and continuation patterns in this series.
Follow to get updated with all the informative and educational trading ideas.
Next Pattern we will cover: Round Bottom Pattern
Symmetrical Triangle in NTPC.A symmetrical triangle is a chart pattern characterized by two converging trend lines connecting a series of sequential peaks and troughs. These trend lines should be converging at a roughly equal slope.
1. Symmetrical triangles occur when a security's price is consolidating in a way that generates two converging trend lines with similar slopes.
2. The breakout or breakdown targets for a symmetrical triangle is equal to the distance between the initial high and low applied to the breakout or breakdown point.
3. Many traders use symmetrical triangles in conjunction with other forms of technical analysis that act as a confirmation.
The price target for a breakout or breakdown from a symmetrical triangle is equal to the distance from the high and low of the earliest part of the pattern applied to the breakout price point. The stop-loss for the symmetrical triangle pattern is often just below the breakout point.
Setups are not as important as you thinkSetups are a very small part of what is necessary for a complete trading system, yet people still claim their setup conditions are their systems.
When you see the setups in stock, you have an increased probability that the stock will go up. But it is through position sizing strategies &
managing the ratio of risk to reward throughout the trade that produces great profits in the trade.
DR REDDY: Positional & Swing Pick!!!
Method:
Support & Resistance role reversal
Risk Management:
Risk only 2% of your capital
Buy 30% of your position at CMP, and wait for the pullback, if the price respects the level of 5500 execute your 70% position.
Mindset:
Note= Trade with probabilistic mindset, no matter how much analysis you do there is always a 50-50% chance.
Our main objective is to ''Cut your losses short and let your profits run.' '
Remember to be profitable you don’t have to be right every time,
you just have to be right big and wrong small.
Fibonacci Masterclass - Fibonacci Retracement and ExtensionHi guys, I have finally completed the thread on Fibonacci (Though it took longer than usual). I have tried with the best of my little knowledge to create this thread. This has everything you need to know about Fibonacci retracement and Fibonacci extension. Also, if the thread is free that doesn't mean I have compromised with the quality. All you have to do is just read this thread again and again until you get a good grasp of it. everything.
Table of Contents:
1. What Are Fibonacci Retracement Levels?
2. Significance of Fibonacci Retracement levels
3. Finding Fibonacci Retracement Levels
4. How to use the Fibonacci retracement levels?
5. What are Fibonacci Extensions?
6. Significance of Fibonacci Extension levels
7. Finding Fibonacci Extension levels
8. Difference Between Fibonacci Retracements and Fibonacci Extensions
What are Fibonacci Retracement levels?
• Fibonacci retracement levels are horizontal lines that indicate areas where the price could stall or reverse.
• These horizontal levels can act as a potential support or resistance levels
• They are based on Fibonacci numbers. Each level is associated with a percentage which means how much of a prior move the price has retraced.
• The Fibonacci retracement levels are 23.6%, 38.2%, 61.8%, and 78.6%.
• While 50% is not a pure Fibonacci ratio, but it is still used as a support and resistance indicator. This is because people worldwide regard it as an important level.
• The price won’t always bounce from these levels. They should be looked at as areas of interest. Hence, please use the Fibonacci retracement as a confirmation tool.
Significance of Fibonacci Retracement levels
Fibonacci retracements can be used to:
• Place entry orders
• Determine stop-loss levels
• Set price targets
For example, A stock may be in an uptrend. After a move up, it retraces to the 61.8% level. Then, it starts to go up again. Since the bounce occurred at a Fibonacci level during an uptrend, you can enter long positions with a stop loss just below the Fibonacci level or at the candlestick low.
Finding Fibonacci Retracement levels
In order to find the Fibonacci retracement levels, you have to find the recent significant Swing High and Swing Low.
• For uptrends, select the Swing Low and then the Swing High.
• For downtrends, select the Swing High and then the Swing Low.
Example: Fibonacci retracement in an uptrend
Example: Fibonacci retracement in a downtrend
How to use the Fibonacci retracement levels?
If the price is approaching a Fibonacci level, you should look out for the following things at the point of interaction or in the vicinity of the level.
• Some reversal candlestick pattern
• Volume is above average.
• Moving average
• RSI divergence
• Previous S/R level or pivot level
The trade will be a high probability trade if some of these factors create a confluence zone.
What are Fibonacci Extensions?
• Fibonacci extension is a tool that can be used to find price targets or estimate how far a price may move after the retracement/pullback is over.
• Extension levels are also possible areas of interest where the price may stall or reverse.
• It can be used to find projected areas of support or resistance when the price is moving into an area where other methods of finding support or resistance are not applicable or evident.
• If in a stock, a new high/low occurs, the trader can use the Fibonacci extension levels to get an idea of where the price can go.
• Fibonacci extension levels can be calculated to give the trader ideas on profit target placement.
Significance of Fibonacci Extension levels:
• Fibonacci extensions can be used for any timeframe and in any market- stocks, commodities, cryptocurrencies, etc.
• Fibonacci extension levels indicate a price area that will be significant for the stock after the pullback/correction is over.
• Extension levels can be drawn on different price waves over time. When levels from these different waves converge at one price, that could be a very important area.
Finding Fibonacci Extension levels
In order to find the Fibonacci extension levels, you have to find the recent significant Swing High and Swing Low.
• For uptrends, click on the Swing Low and then on the Swing High. Then go to the Fibonacci setting and click on reverse. Or if your software directly has the extension tool then it’s even easier.
• For downtrends, click on the Swing High and then on the Swing Low. Then go to the Fibonacci setting and click on reverse.
Example: Fibonacci extension in an uptrend
Example: Fibonacci extension in a downtrend
Difference Between Fibonacci Retracements and Fibonacci Extensions
• Fibonacci retracements provide levels for a pullback whereas Fibonacci extensions provide levels to move in the direction of the existing trend.
• For instance, a stock goes from 50 to 100, and then back to 75. The move from 100 to 75 is a retracement. If the price starts rallying again and goes to 150, that is an extension because the price moved past the previous swing high which is 100 in this case.
This is everything you need to know about Fibonacci retracement and extension levels. This thread is more than enough to make you profitable. Keep reading and revising until you learn everything written in this post. I hope you find this post useful. Also, if anyone is interested in getting a consolidated PDF version of this thread, then you can message me, I'll provide it.
Disclaimer: This is NOT investment advice. This post is meant for learning purposes only. Invest your capital at your own risk.
Happy learning. Cheers!
@johntradingwick
