Using the Moving Averages and RSI to optimize buying processIn this chart I have explained my rationale using Moving averages, relative strength and RSI to initiate a buy on this scrip.
I always use a weekly chart to check for overall trend and analysis and based on it will initiate a buy on a Daily chart.
Explanations are given on the chart. The idea is get the maximum conditions in our favour for a profitable trade. Hope it will be helpful.
Another important thing is to always define a stop loss if the trade does not go according to plan.
Community ideas
Breakaway GapWhat is the Breakaway gap?
It occurs when the price goes above the resistance or below the support. It changes price direction from the existing chart pattern.
Here, there was a price trend for 1 month where prices were trading in the ascending parallel channel.
But on the 13th of June, it changed its direction.
Impact of Breakaway gap?
It creates a strong resistance. When it occurs on the downside, the probability of the gap getting filled is very low because market participants become fearful and a chain reaction kicks in.
Whereas in an upside breakaway gap, it acts as support and there is a higher possibility of slight retracement because here participants become greedy and close their position.
How to trade it?
In the downside breakaway gap, consider the low of the previous candle as a point of exit and short the calls
In the Upside breakaway gap, consider the high of the previous candle as a point of exit and short the puts
Nifty: A Study through Time CyclesNifty is in consolidation phase. This may or may not lead to a bear market and let’s not discuss it as of now. I will try to analyze Nifty, on the basis of support and resistance levels and time cycles, for the next possible swing and its direction.
Support and Resistance levels
-------------------------------------
It can be seen on the chart that Nifty made a high in Oct21 and faced resistance, followed by a sharp reaction of 11%. It rallied till mid of Jan22 and again faced a sharp larger reaction of 14%. It then rallied 15% throughout Mar22, faced a trendline resistance and reacted 13%
If we draw important support and resistance lines through this price action we get three major levels
-Dynamic resistance level through the trendline
-16780 to 16850 multiple support zone which is now a potential resistance zone
-15670 to 15750 support zone which also coincides with a prior area of consolidation
Time Cycles
----------------
If we look at peaks, there is a 62bar high cycle followed by 51 bar cycle.
In this sequence, the next cycle could have been a 40bars for the market to test trendline resistance. But that is not the case and here the market is at 16780-16850 zone after 40 bar cycle.
This clearly reflects some weakness in Nifty as it was able to cover roughly half the distance on the upside compared to January and March rallies, in almost same number of days. It’s clear that the prior support zone is acting as resistance.
At the valleys, there are 53 and 43bar cycles. The next cycle could be a 33bar cycle where Nifty can either breaks the recent support 15670-17750 or retests it. The 33bar cycle coincides with June expiry so there is need to take a cautious approach on the upside until 16850 resistance is taken out.
I hope this idea will help you to understand the markets another non conventional perspective.
Keep liking and sharing your thoughts.
Disclaimer: This post is for educational purpose only and not a trading/investment advice.
'SWING' your profits with 'SWING' trading strategies !!! In a series of educational posts we have covered so far the candlestick patterns and moving average crossovers,
in this post we will elaborately cover the swing trading strategies. Let's start !!
->Definition of swing trading - : Swing trading is generally referred to a trade which is carried out for a short duration of time. Swing traders do not wait
till the price action opposes there direction, they are known for there prior moves.
They are good in identifying the shifts in market trend with the help of various techniques which is explained throughout this idea.
Swing trading strategies include use of Fibonacci, Bollinger Bands, Channel Trading, Moving Average, MACD crossover and better
understanding of chart patterns like Head & Shoulder, Flag, Triangle Patterns.
All the above said patterns has been covered in the previous ideas on continuation patterns.
->Swing trading strategies -:
->Fibonacci Retracement: Stock price has an tendency to retrace, and swing traders uses this retracement as an opportunity to enter in a trend.
The retracement levels could be identified using Fibonacci Retracement, all you need is to identify the prior trend and if price retraces till 0.618 level and
again resumes the trend jump on it and ride the position till it reaches 0.236 level.
->Bollinger Bands : Most probably, stock price tries to move in Bollinger band, which is used by swing trader to initiate and terminate there position.
Firstly you need to identify the major trend, let suppose it's bearish then when the price reaches the upper bound and there is a formation of bearish candle
you could initiate a short position also when a bearish candle is formed at median, there also you can initiate a short position.
->Channel Trading: Sometimes, stock price trades in channel now this channel is used by swing traders i.e. when the trend is bullish they try to take long
position at lower range of channel and book partial profits on median and wait for price to reach upper end.
->Moving Average: Here traders identify the major trend and take position according to it, with help of crossovers they generally prefer 10DEMA crosses 20DEMA.
->MACD: This is a simple strategy where the trades are initiated when there is MACD crossover but the cross should corelate the trend.
My Observation-: These strategies could be more accurate if used to trade with trend, i.e. if the stock is in uptrend only take positions for positive signal and just avoid
negative signals.
Another, basic strategy is to take position when a script moves above swing high or below swing low, here the only thing to ponder is to manage your risk. Don't take over position understand your risk appetite then take positions.
Circadian Rhythm For TradingHello traders 👋 how are you?
As we know it is not just chart analysis or strategies that bring success in trading but there are other physical-psychological 🦾 factors also that silently act in the background and can enhance trading efficiency.
In this post I have tried to throw some light on the daily schedules ⏰ that can help traders to improve their trading performance ✈
✅ After-Market Slow Down 😌
>>Traders burn their veins watching every single candle and every tick on the chart. This leads to eye strain as well as brain fatigue.
>>A two-hour rest after the market close is essential to rejuvenate yourself for family keeping.
✅ Evening Preparation 👀
>>Its difficult to search and plan your trades during live market. Therefore you need an hour or so to look into your charts, before supper.
>>You may take help of screeners or shuffle through every chart on your watchlist to plan your trades.
✅ Deep Slumber 😴
>>Sleeping improves memory, boosts immune system, strengthens heart and increase productivity.
>>For having a sound sleep of 7 hours or so, stay away for your mobile and laptop screens after 9 O'clock. Spend quality time with your family and kids.
✅ Overnight Adaptations 🙃
>>Wake up early and move out in the fresh air if possible.
>>Do some jogging, stretching, exercising.
>>After morning activities, watch out for any change in sentiment that happened overnight due to western markets and see if you need to modify your plans.
✅ Meditation 👼
>>Now that everything is almost done and there are still 15minutes or so in the market open, just sit in a relaxed physical state and concentrate on your breathing.
>>Meditating this way for a few minutes may help for more effective execution of your plans.
✅ Plan Execution 🤺
>>The market opens and its now time to put your plan into practice.
>>If your analysis was correct, there should not be any hesitation in executing your trades.
>>Always mind trade management and risk management.
Thanks for reading. Hope this was helpful!!
Do like and comment for more such posts in the coming days 🙂
Bravetotrade
A beginner's guide to trading - Chapter 5As a newbie trader everybody has doubts like, “Am I analysing the charts well?”, “Does my analysis skills are improving?”, “Have I changed my trading style?” etc... How to know these? By journaling you can know and measure your progress. Best way to journal your analysis is using trading view and publishing your analysis. You can publish as private ideas, if you don’t want others to see it. Since the charts are dynamic, any time you can check your analysis and the market movement after that.
Lets say person A has just started analysing and he use trend lines.
In the above chart when the price breaks the trend line he plans to go short.
The trend line break was good and gave good profit.
In the above chart the analysis was to go long when the price break the trend line.
After breaking the trend line the price went sideways. Very less movement only.
The price was falling and plan was to go long once the down trend was over by breaking the trend line.
The price gave break out upside, but did not sustain and went sideways.
Analysis 1 : good move
Analysis 2 : very small move.
Analysis 3 : No move.
Total – 3 worked – 2 Did not work – 1
Next step was to improve further. You can add conditions like volume support, current market situation.
Analysis 1 : Price was unable to break the resistance and was falling from resistance so we can go short.
Analysis 2 : Price was not having volume support to move up further.
Analysis 3 : Less volume and did not move up.
These observations you can do in live market only. First analyse, plan and be ready for market. Then during market hours, observe and trade.
After market hours check how your analysis worked, how you traded, what mistakes you have done in analysis and trading. Make this process as a
habit. If you did not develop this as a habit from the starting itself, then making it as a habit becomes a tough process. Journaling your trades help you to improve and measure your progress. Start today if you have not done it so far. Perfection comes from practise. Dont stress yourself by expecting perfection from day 1.
As a trader you have to make yourself ready to face the market, adapt the market and measure you progress. Remember you can trade better than you think, if you follow this process.
What is Fibonacci extension?Hey everyone! 👋
Last time we explained some of the basics to know when it comes to understanding the Fibonacci retracement tool. If you haven’t read that post, be sure to check it out here:
In this post, we are going to look at the Fibonacci extension along with a few exhibits that may help you solidify your understanding of this unique trading tool.
Please remember this is an educational post to help everyone better understand investing and trading tools. In no way are we trying to promote a particular style of trading!
Table of Contents:
1. What are Fibonacci extension levels?
2. What is the significance of extension levels?
3. How to find extension levels?
4. Difference between the Fibonacci retracement and Fibonacci extension
Without further ado, let’s jump in!
What are Fibonacci extension levels?
A 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.
Fibonacci extension levels can be calculated to give the trader ideas on profit targets.
Significance of Fibonacci extension levels
Different traders use this tool differently but the most common usage is as follows:
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.
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. In this case, the extension tool can be used to find the optimal targets after the price moves above the swing high level (100% level).
How to find Fibonacci extension levels?
In order to find the Fibonacci extension levels, you have to find the recent significant swing high and swing low and then plot the Fibonacci extension accordingly.
For uptrend: First, select the swing low and then the swing high. Then go to the Fibonacci settings and select reverse.
For downtrend: First, select the swing high and then the swing low. Then go to the Fibonacci settings and select reverse.
Exhibit: Fibonacci extension in an uptrend
Exhibit: Fibonacci extension in a downtrend
Difference Between Fibonacci Retracements and Fibonacci Extensions
Fibonacci retracements provide levels for a pullback whereas Fibonacci extensions provide levels in the direction of the existing trend.
For instance, a stock goes from 50 to 100 and then falls 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.
Conclusion:
Adding Fibonacci analysis with other common methods of technical analysis can be useful for adding confluence to a trade.
Thanks for reading! Hope this was helpful!
See you all next week. 🙂
– Team TradingView
Feel free to check us out on Twitter and Instagram for more awesome content! 💘
Buying Climax: What, Why and HowBuying Climax:
is a situation on the chart that represents ‘exhaustion’. This is the sharpest upward price surge where the last set of buyers enter the stock, thinking that the stock is going to the moon and never look back. This also reflects ‘Greed’ entering in to the stock. Investors who bought at the lower prices, during accumulation, take it as an opportunity to exit from the stock. Therefore, it represents those pre-conditions that lead to price correction.
The climax is associated with very wide range up bars/candles with exceptional volumes, followed by supply in most cases.
I will take up the case of Dr. Reddy with no particular reason but as a good example that just came in front of me and I thought it will be a good idea to share with the trading community what a climactic action looks like.
Dr. Reddy had been in a downtrend between Oct2015 to Aug2017. It then consolidated for more than 2years before it decisively broke out of Rs2800 supply zone in Jan-Feb2020. It retested the supply zone in Mar2020 market correction and held it as a new support.
Thereafter we can observe three major breakouts seen on this weekly chart, which would help us in understanding a buying climax in a better way.
At every breakout you need to observe the range of the breakout candle and the volume involved in the breakout. A good breakout needs a wider candle with a strong closing and good volume. Let us see what happened.
Breakout 1
Range of the candle – 600 pts or around 18%
This seems an average type of range compared to the pre-breakout candles. So nothing alarming here.
Volume –
Slightly higher than the average volumes.
Breakout 2
Range of the candle – 600 pts or around 15%
It’s also an average type of range
Volume –
Is very high, more than any candle in this uptrend since 2020
Breakout 3
Range of the candle – 1160 pts or around 27%
This is exceptionally wide range
Volume –
Exceptionally high (More than 36mn). Not seen anywhere on the chart.
This is buying climax. You can see that, on the very next week, there was extremely high volume on the downside. This further validates that seller have entered the market and the upside could be limited.
We can draw a resistance line from this Sep2020 highs. Price corrected 25% from this resistance in the next 5-6months.
Also observe the Breakout4 (Jun2021) of the resistance (vertical dotted line)
Candle Range – narrow
Candle volume – very low compared to previous breakouts.
This is a weak breakout which could not sustain and is followed by a big supply candle. Further indication that the stock has lost steam.
I hope this idea was helpful.
Do like and comment for more such educational posts in the coming days.
Reversal candlestick patterns1.Bullish Engulfing : The first candlestick is a red one, and the second is green. A green one “engulfs” the red one because the body has a lower opening price and a higher closing price
2. Evening Star : You need three candlesticks to see this Evening Star pattern, a green candle with a long body, a short green or red candle, and a red candlestick.
3. Dark Cloud : The price gaps higher and then sells off, creating a candlestick that shows a closing price lower than the midway point in the previous candle.
4. Spinning Top : A spinning top is a candlestick pattern having a short real body with long upper and lower shadows.
5. Tweezzer Bottom : The Tweezer Bottom candlestick pattern is a bullish reversal candlestick pattern that is formed at the end of the downtrend. It consists of two candlesticks, the first one being bearish and the second one being bullish candlestick.
6. Two Black Gapping : The bearish two black gapping continuation pattern appears after a notable top in an uptrend, with a gap down that yields two black bars posting lower lows.
A beginner's guide to trading - Chapter 4This question has been asked before. It has been asked now. I will be asked in future. What question is that? It is nothing but, “How to select stocks to trade?”
From beginners to expert traders, everybody knows stock selection is important. Especially for intraday it is very important as same stock won’t give movement daily.
There are two methods. One is to trade on active stocks and another is selecting a stock which has formed trade set up as per your strategy. Ok, now how to select stocks? For intraday, the stock you trade should be an active stock. If the price is above 400 rs means, generally the movement will be good. The price will move with momentum & show trend strength.
The stocks you select should be
-- Active
-- Above 400 Rs
-- No spikes in movement (very long upper & lower wicks).
Let us take an example. Beml is in my active stock list.
In the above chart on June 9th price was narrowing within a narrow range forming a symmetrical triangle. It means we can expect break out any side. I selected this stock to trade on June 10th. Next step is to prepare a trading plan. Bearish below 1330, I can go short if the price showed bearish strength with 10 points as stop. Bullish above 1350, I can go long if the price showed bullish strength with points as stop.
When you have a list of active stocks, you can filter them by pattern formation like the above example and trade.
Below is another example.
In the above example, I have selected the stock because of the consolidation. I have expected consolidation break out once the price moves out of the zone. The levels are marked in the chart.
Another method to select stocks is based on the strategy you use.
I have posted the strategy used already. Please refer the link below if you have not read it.
This trade set up forms in live market. So you have to wait for 15 minutes to know whether your trade set up has formed. These are just examples. Your strategy and trade set ups can have unique features depending on your trading style. It does not matter whether it is intraday or short term trading, always trade on stocks which is active and which forms the trade set up as per the strategy you use.
Control emotions during tradeIt is very important to control your emotions during trading, human emotions are a big hurdle in trading, you can not maintain discipline if you can not having control on your emotions. Without discipline you can make money in market but you can't retain it.
Here is 5 things you can adopt to improve your trading skill and control emotions.
SET ALERTS :
we use to watch market continuously and during watch we see so many trades which we should not take, it disturb our trade filtration and also affect out trading phycology, we should wait for our levels and what our set strategy giving trade not to enter early or fake trades, you should set alert according to your levels,chart pattern,breakout or breakdown, any of your trading strategy you are using, there is no need to watch screen constantly in this free time you can also paly any indoor game to keep you mind refreshing and active,
once your price alert hit come up on screen then you can go with your trade.
VOLATILE HOUR :
some time we find trades in sideways or less movementing market and it face us stop loss, no movement or very small target, it's better to took any trade in volatile hours so that trade can exactly work according to your strategy try to avoid trades which are generating in less market movement.
Generally Indian market movement is
9:15 to 9:30 very volatile
9:30 to 10:00 volatile market
10:00 to 11:30 stable market
12:00 to 2:00 correction/stable/new/global market
2:30 to 3:00 volatile
3:00 to 3:30 last volatility
NEVER WATCH YOUR PROFIT & LOSS DURING TRADE :
when we see running profit loss in dmat it automatically affect psychology of trade and we start convening our self for exit, same side in profit and and loss also some time we more think to hold that trade either to exit.
we should took trade and either to see p&L we should watch only price and exactly exit according to our strategy do not exit too early do not exit too late if you took that trade according to your pattern, technical any strategy then you should also exit according to that strategy. watching price in compare of P&L helps a lot for long run.
STOP AFTER THREE CONSECUTIVE WINS OR LOSSES :
it is very important to stop at a point every day in trading, if you did 3 trades either continuously wining trade or loosing trade, at this point you should stop your trading for the day.
market is not for one day it will open again next day with same things. do not excited in profit and also in loss, if it was bad day not a problem close your terminal come again next day with fresh mind do not influence your fresh trade with old one .
TAKE BREAKS :
taking break in trading is very important to keep your mind happy active and fresh every time, as just we do keep our personal and professional life separate, do not mass up one with other.
take your self out on weekend do not think about your regular profit and loss take proper break that you need.
Perfect example of DOUBLE BOTTOM With DIVERGENCENSE:VOLTAS
Double bottom is always a perfect pattern for LONG ENTRY.
But I prefer to add some more factors which increases my probability to achieve the target.
In this analysis tutorial, we will learn that.
* After falling wedge pattern breakdown Stock momentum is exhaust near a good Support.
- Never Entered in ONE SIDED BREAKDOWN or BREAKOUT. Wait for the Next GOOD SUPPORT - RESISTANCE, Because one sided move Creates a Doubt( maybe its a TRAP for a RETAIL TRADER like us).
- ONE SIDED BO-BD can be a FAKE BO-BD ( In Mostly cases )
- And incase, If it's not a Fakeout - Fakedown, But a genuine one and we missed that - DON'T PANIC - Never entered in FOMO because this can spoil our RR.
- THIS STRATEGY IS A SOLUTION FOR ALL THE ABOVE SITUATIONS.
* And at that support( IN BIGGER TIME FRAME) I Found BULLISH DIVERGENCE.
- Divergence is basically a manipulation by a big players.
- In Bullish divergence with the help of some OSCILATTORS we see PRICE IS DECREASING but AVERAGE PRICE or STRENGTH or VOLUME is INCREASING. - {Opposite in BEARISH DIVERGENCE}
- But if there is not any SUPPORT - RESISTANCE - - - - - IGNORE THAT AND NEVER ENTER.
- Because WE FOLLOW ONLY&ONLY PRICE ACTION, Indicators is secondary.
- And basic principle of PRICE ACTION is - NEVER ENTERD WITHOUT A SUPPORT RESTISTANCE ZONE OR TRENDLINE SUPPPORT OR ZONE.
* When this stock Follows all rules of BULLISH DIVERGENCE I took a LONG ENTRY.
- COMMENT if you wants to know all the RULES of DIVERGENCE.
* Now chart pattern shows a signal of UPSIDE MOVE and our Divergence setup gives us a confirmation of that SO I ENTERED and ACHIEVED THE TARGET
I hope this is helpful for beginners and a good revision for a pro players.
DIVYA BIHARI DAS this side.
THANKYOU SO MUCH.
--------- COMMENT -----------
- Your Views
- My Mistakes
- Next Topic
- Anything Relevant
CANDLE PATTERN 2 - BEARISH ENGULFINGPattern name: Bearish Engulfing
Pattern Type : Bearish Reversal
No. of Candles : 02
How to Identify it ?
1)There must be a preceding Uptrend.
2)A short Green candle followed by a long Red candle.
3)The Red candle should opens higher & closes lower than the Green candle.
4)The Green candle should be completely engulfed by the Red candle.
Psychology behind it :
1)The Bulls lose momentum & the Bears take charge and managed to close below the Green candle.
2)It implies the bears have fully override the bulls.
How to trade it ?
1)Look for the Bearish Engulfing at the Top of the Uptrend.
2)Upon confirmation, open a Short position in the 3rd Candle.
3)Place a Stoploss above the high of the Red candle.
How to create high quality trade ideas?Hey everyone! 👋
This week, we will be taking a look at the ingredients that go into creating and posting high-quality trade ideas.
While many think that a good trade idea begins and ends with finding a high probability chart setup in a liquid, volatile asset, the *best* trade ideas often combine multiple disciplines - which could include macroeconomic analysis, fundamental analysis, technical analysis, or some combination therein - into one cohesive unit. Getting in the habit of incorporating all of these factors into your thought process can lead to much higher quality setups, whether or not you choose to share them with the community.
Let’s jump in!
There are a couple of questions that you should ask yourself when trying to come up with high-quality ideas, and they boil down to the familiar five:
Who, What, Where, When, and Why.
Let's start with Who.
WHO:
Who is this trade idea meant for? When posting a trade idea, don’t assume that the idea is one-size-fits-all. The most obvious way TradingView helps in this regard is by categorizing posts by asset class, so FX traders are looking mostly at FX ideas, and crypto investors aren’t constantly exposed to commodity futures spreads. However, there are more subtle ways this happens as well. Different traders and investors often have different styles of trading, and so even within a single asset class, a long-term investment idea may not be applicable to a short-term trader. When creating a trade idea, it may make sense to identify to readers (and yourself) who this idea is for, and within what strategy it might best fit.
WHAT:
Most ideas do a great job at answering this question! It’s very simple: at its core, what does this idea want to do? Whether that idea boils down to shorting the stock market or building a long/short cryptocurrency spread, make sure that your idea clearly identifies what the core thrust of the trade is.
WHY:
This is the crux of any good trade idea. Why should someone commit capital and risk money according to your vision? It is common for traders, especially new traders, to think that answering this question comes down to building up a confluence of price patterns, indicators, and chart drawings until they line up and it is all systems go. In some cases, this serves as a reasonable answer to the “why” question - especially when assets have strong momentum.
However, oftentimes this approach may not go deep enough. What if the long technical setup on your chart is in a stock where the company’s business outlook is worsening? What if the descending triangle you’re looking at trading occurs within a larger bull market? This is where incorporating multiple disciplines, whether it’s fundamental analysis or macroeconomic understanding, can improve the quality of your trade ideas. Understanding some of the context surrounding the asset you’re trading can serve to layer probability in your favor.
Here’s the bottom line: the current price in any market is a reflection of the consensus view of the future. It’s important to illustrate *why* that pricing might be materially incorrect.
WHERE / WHEN:
It’s important to illustrate why *right now* is the right time to act on the idea, and this is where technicals can come in very handy. Broadly speaking, fundamental data on most assets only comes out once every couple of weeks, if that. It’s even longer between fundamental data releases for stocks. Because of this, utilizing price patterns, indicators, candlestick charting, and other technical analysis can be extremely helpful in defining risk, pinpointing entries, and trading more efficiently overall.
This is also where clean charting comes in. It’s important to identify how trader positioning, supply and demand zones, and other factors (that technicals help illustrate) affect the timing and risk of the idea. In addition, when publishing an idea on TradingView, the chart is one of the most visible and prevalent ways of communicating this information. Making these items clearly defined can significantly improve the quality of a trading idea and ensure clear communication of the important information.
So there you have it - the key questions that are at the core of any good trading idea! We look forward to seeing how this framework is incorporated into future posts.
Thanks for reading! Hope this was helpful!
See you all next week. 🙂
– Team TradingView
Feel free to check us out on Twitter and Instagram for more awesome content! 💘
How Double Bottom Pattern looks likeWhat is double bottom pattern?
A double bottom pattern is a technical analysis charting pattern that describes a change in trend and a momentum reversal from prior leading price action. It describes the drop of a stock or index, a rebound, another drop to the same or similar level as the original drop, and finally another rebound.
How do you trade double bottom patterns?
First low – The market bounces higher and forms a swing low. At this point, it’s likely a entrancement in a downtrend.
Second low – The market rejects the previous swing low. Now, there’s buying pressure, but it’s too early to tell if the market could continue higher.
Break of neckline – The price broke above the Neckline (or Resistance) and it signals the buyers are in control — the market is likely to move higher.
----------------------------------
The False Break : How to trade the Double Bottom Pattern and profit from “trapped” traders
Now…
When you trade the Double Bottom, you must pay attention to the time and space between the lows — the larger the “gap”, the better.
Why?
Because when the lows are far apart, it gets the attention of more traders who could push the price higher.
As the price breaks below the first low, bearish traders will short the markets and have their stops above the lows.
But if the price quickly reverses higher, the short traders are “trapped”.
And you can take advantage of it by going long, anticipating if the price moves higher, it’ll trigger their stops and push the market in your favour.
__________
The Double Bottom Breakout Technique
Here’s the thing:
You don’t want to “chase” a breakout after the Double Bottom is formed because the price is likely to reverse lower.
Instead, you want to see strength from the buyers before buying a breakout.
Here’s how…
1) Identify a potential Double Bottom
2) Let the price to trade break above the previous swing high
3) Wait for a weak pullback to form (a series of small range candles)
4) Buy on the break of the swing high
Action & Reaction move Analysis in simple way.Simplicity Is the Key to Success . The simpler we keep things, the more successful we will be. It's as simple as that. Therefore, Action & Reaction is very simple to understand and act. Let's move ahead.
Two types of movement in the market: Consider an uptrend and, bulls are in charge. The first major move in trend is the Actionary move . when finally pause to catch their breath, the bears take over and send the price lower. The lower is counter to the over uptrend and what we call a Reactionary move . Typically, the reactionary move can be weak(1/3) or deeper(2/3). Sometimes a reactionary move can sideway and, some people call it a pullback also which is part of a larger trend. when it could end up and new actionary move in the opposite direction. Trade and Trend is your friend, so we can say here take a position in direction of actionary move.
1 to 2 is an actionary move
2 to 3 is the reaction of 1 actionary move.
3 to 4 is the subsequent actionary move.
4 to 5 is a new reaction.
5 to 6 is unclear which has not still made a lower low. It could be bottoming out. No one really knows what will happen next. In this case, we will think about both sides. The first side, seems to be a new actionary move up and if 5 to 6 actionary move is exists, the price remains actionary for looking lower low.
What will be your trade action?
1. Up (long)
2. Down (short)
Type in the comment section.
TimeCycle Analysis is looking for the up move on weekly timeframe:
Ethereum Co-Founder Talks of Crypto CrashMajor Crypto-Currency prices have been tumbling for a couple of weeks now and the whole market has been crashed. Luna, one of the top crypto-currency having a price of $115.70 on April 5 has fallen to $0.0991 on May 13. Having around average -30% fall in price daily.
What is Fib Speed Resistance Fan? How to use it?A Fibonacci fan is a technical analysis charting technique that uses the Fibonacci ratio to predict support and resistance levels graphically.
The Fibonacci ratio can be used to describe proportions in everything from nature's smallest building blocks, such as atoms, to the universe's most advanced patterns, such as unimaginably large celestial bodies. Nature relies on this innate proportion to maintain balance, but the financial markets appear to follow suit.
Traders can use the Fibonacci fan lines to predict key points of resistance or support where price trends may reverse. Once a trader has identified patterns in a chart, he or she can use those patterns to forecast future price movements as well as future levels of support and resistance. The predictions are used by traders to time their trades.
For both the price and time axes of charts, technical analyses based on Fibonacci ratios are available. Retracements can also be used by analysts to generate arcs or fans on arithmetic or logarithmic scales. Nobody seems to know whether these tools work because stock markets follow a natural pattern or because many investors use Fibonacci ratios to predict price movements, causing them to self-fulfill. In any case, key support and resistance levels at 61.8 percent tend to occur frequently on both uptrends and downtrends.
Simply find the proportion of one number in the series to its neighbors to derive the three key ratios commonly used in technical analysis based on the Fibonacci series. Adjacent numbers produce the inverse of phi, or 0.618, corresponding to a 61.8 percent retracement level. Numbers two positions apart in the sequence produce a ratio of 38.2 percent, while numbers three positions apart produce a ratio of 23.6 percent.
Resistance to Speed Fan lines can also be used to represent support or resistance lines. Price frequently remains above the higher speed line during an upswing. When this line is breached, prices often fall to the lower speed line, which often becomes the support level. If prices fall below the higher speed line, then climb to the lower speed line, the lower speed line becomes the resistance level. Breaking a lower speedline in a downtrend suggests a likely rise or rally to a higher speedline. If the line is broken above, the rally may continue to the top of the previous trend (or the underlying trend line).
Rm & Am strategyA combination of Relative Momentum indicator
and Absolute Momentum Indicator .
Relative Momentum is a measure of relative strength of a script compared to index or other scripts
Absolute momentum is a measure of its own strength compared with its value n periods before...
I use a combination of 2 absolute momentum lines of 10 & 21 ...or 21 & 52 based on my requirement + 1 relative momentum indicator with Nifty index as default comparative symbol.
One example how I use this indicator is
for Intraday ... 2 Absolute mementum indicators of 10 & 21 ... both should be in same direction.. and the closer they are the stronger the signal.
for swing & positional , I include 1 relative momentum along with 2 absolute momentum...
Also ,the strong signal can be validated when the candle is bullish , no near by supply zone or the candle is at demand zone .
Explore the indicator ,its your imagination & innovation.
Often u can even catch the extreme bottom.
Mix this with my Rsi crossover cardwell ranges indicator for best results.
"Crossover" your limits with "Crossovers" !!!!Through series of educational posts we have got an elaborate knowledge of candlestick pattern which include both
reversal and continuation patterns and this post is somewhat different from candlestick it's all about moving average crossovers.
General concept of crossover is that a fast moving average surpasses slow one in any directional trend and could help you be in right side,
A moving average crossover occurs when two different moving average lines cross over one another,
Because moving averages are a lagging indicator, the crossover technique may not capture exact tops and bottoms. But it can help you identify the bulk of a trend.
A moving average crossover system helps to answer these three questions:
Which direction might the price be trending (if at all)?
Where might be a potential entry point for a trend trade?
When might a trend be ending or reversing?
All you have to do is plop on a couple of moving averages on your chart, and wait for a crossover.
If the moving averages cross over one another, it could signal that the trend is about to change soon, thereby giving you the chance to get a better entry. By having a better entry, you have the chance to have better reward.
-> Short term crossovers: it includes 5 DEMA crossover 20DEMA , this crossover is for daily timeframe i.e. for short term traders
5DEMA CROSS ABOVE 20DEMA
although some move was left out but then also the return was splendor NOTE: crossover give signal only on conformation so some move could be left out.
5DEMA CROSS BELOW 20DEMA
-> Long term crossovers: it includes some important crossovers i.e. Golden and Death crosses
GOLDEN CROSS:
here major moving average crosses each other i.e. 50DEMA cross above 200DEMA it signifies major uptrend in large time frame
though we have seen major fall in metal sector but still they are golden cross period
DEATH CROSS:
here major moving average crosses each other i.e. 50DEMA cross below 200DEMA it signifies major downtrend in large time frame
the major fall in nifty was predicted by me earlier with help of this cross
In summary, moving average crossovers are helpful in identifying when a trend might be emerging or when a trend might be ending.
The crossover system offers specific triggers for potential entry and exit points.
These triggers should be confirmed with a chart pattern or support and resistance breakouts
My Observation :- short term moving average crossovers could be confirmed with RSI i.e. if RSI is greater than 50 uptrend possible and if less than 50 downtrend possible if it is not the crossover could be false in that case wait for conformation.
long term moving average crossovers could be confirmed with RSI i.e. if RSI is greater than 60 uptrend possible and if less than 40 downtrend possible if it is not
the crossover could be false in that case wait for conformation.
Studing Consolidation Phase This is hourly timeframe.
This is how I analyze the consolidation only technically.
From fibo. recent top to bottom, Nifty is taking resistance 0.38 fibonacci level.
Let's pointout the short trend and understand each.
1] Nifty started consolidating 6th May 2022.
It started falling, gone sideways for sometime and gave bounce back.
2] And it tested the 16400 zone. As it was a straight one side move, it was obvious it will give a retracement.
3] But it was again a one side move, this time downward, and tested the recent bottom.
Here, we witnessed a sharp upmove from bottom to top and again to bottom.
4] Again from 20th May, a sharp upmove towards resistance.
5] Tested and fallback this week.
6] Bounce backed again and now near resistance zone.
In all of these short term trends, we can see thick bullish and bearish candles in phase 1 and 5.
Though bulls failed in these phase.
Almost each phase has 1) bullish and bearish belt hold
2) bullish and bearish marubozu
Except phase 2,6 no bearish candlestick of this type.
These opposite candlestick patterns occurance multiple times tells us that market is now choppy, highly volatile.
Outcome of analysis:
In current market situation, bulls and bear are almost equally powerful.
Choopy moves indicates the aggression and dominating will.
This how I analyze a consolidation.
Breaks it down in trend zones and study each, and keep in back of the mind each one's outcome,
and try to anticipate, every possibility. And how much is the chance of taking it place by looking at
bull and bears behaviour.
Note : This is my own analysis and is for information purpose only.
What is Fibonacci retracement?If you have been in the market for some time, you may have heard of “Fibonacci retracements” . Today we are going to share an informative write-up along with a few exhibits that may help you solidify your understanding of this concept.
Table of Contents:
1. What are Fibonacci levels?
2. What is the significance of retracement levels?
3. How to find retracement levels?
4. How to use the retracement levels?
Without further ado, let’s jump in!
What are Fibonacci Retracement levels?
The retracement levels are horizontal lines that indicate areas where the price could stall or reverse.
These horizontal levels can act as 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 retracement levels are 23.6%, 38.2%, 61.8%, and 78.6%.
While 50% is not a pure Fibonacci ratio, it is still used as a support and resistance. This is because people 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, the Fibonacci retracement should be used as a confirmation tool.
Significance of Fibonacci Retracement levels
Different traders use this tool differently but the most common usage is as follows:
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 retracement level during an uptrend, long positions can be initiated with an optimal stop loss.
Finding Fibonacci Retracement levels
In order to find the retracement levels, you have to identify the recent significant swing high and swing low and then plot the Fibonacci accordingly.
For uptrend: First, select the swing low and then the swing high.
For downtrend: First, select the swing high and then the swing low.
Exhibit: Fibonacci retracement in an uptrend
Exhibit: Fibonacci retracement in a downtrend
How to use the 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.
Reversal candlestick patterns
Rising volumes
Moving average
RSI divergence
Previous support/resistance level
Conclusion:
Adding Fibonacci analysis with other common methods of technical analysis can be useful for adding confluence to a trade.
Thanks for reading! Hope this was helpful!
See you all next week. 🙂
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Learning Stages in TradingIn my opinion learning in any field is connected to the "Four stages of Competence" and trading is no different. This post also answers why most traders lose in the stock market.
Following are the four stages which every trader has to pass before attaining success.
Unconscious Incompetence
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This stage belongs to the newbie traders who ignore all the knowledge part. They don't think that they need any kind of knowledge to make money. Their greatest desire is to make money in shortest possible duration so they rely on tips/news for trading. Ultimately they lose and i think more than 50% traders quit at this stage only.
Conscious Incompetence
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At this stage the trader realizes that ignorance is not a bliss. He has already lost in the markets so he thinks that may be he lacks knowledge. He starts reading books; attends online webinars; and attend courses/classes.
Although he is gaining knowledge yet he confused with tons of indicators and strategies etc. He still loses because due to these confusions their is no solidarity in his plans. He has got a poor risk appetite. His ego of being right and urge to win every trade widens his losses. I think less than 30% traders survive up to this stage.
Conscious Competence
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Finally after so many losses the confusion leads to simplicity. The reader gets more systematic with setups and all, but still struggling with psychological issues like fear, greed, lack of discipline, insufficient capital etc.
At this stage, I suppose 85% traders would lose their entire capital and give up scolding themselves for choosing a wrong career. Left with less than 15% traders.
Unconscious Competence
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A very few who reach at this stage and still left with funds make money from money. Trading selective setups becomes an involuntary action for them. They have realized the hardest truths of trading so psychological hurdles disappear from them. They belong to that <10% successful traders.
Which stage do you belong? Do write in the comment section.
Keep liking for more interesting stuff in the coming days.
