A beginner's guide to trading - Chapter 1Candlesticks? Oh come on, even babies know about it. What is new in it to learn? This is what everybody thinks when they hear about the term “candlesticks” in trading. Let me ask you one question. If you know everything about it, then why you are still making losses? Sounds logical, right? So everybody is a beginner here. Join me with open mind and you will learn new things in this series.
Bull candle – Close is above open with strong body. It shows bullish strength. It is also known as momentum candle if it is big. And it has very small upper, lower wicks or no wicks.
A candle plays the role according to where it is forming, what happened before the candle and what happened after that.
Example 1
In the chart below, after downtrend, price consolidated and then it gave upside breakout. So here it is acting as momentum candle.
Example 2
In the chart below, price is in the uptrend, then it consolidated and then it continued upside movement.
Example 3
In the chart below, in the uptrend, the price gave a final strong bull candle before it started to fall. In this scenario, bulls are getting exhausted after the bull candle formation and bears have started to gain strength.
One strong bull candle has played different roles like break out candle, momentum continuation candle and exhaustion candle. It is giving the clue about the trend when you combine the knowledge about where is it forming, why it is forming and what strength it has.
So observe, analyse, understand and trade. All the best...
Community ideas
LIFE OF A NOOB TRADERHello !!
Welcome to the trading psychology of a noob trader. We all know most people lose money in stocks as they do not have a proper idea about investing and invest randomly in any stock without looking technically or fundamentally.
In order to stay in the market, one needs to be patient and hold the horses when the market dumps as nothing goes down forever. Most of the new traders buy stocks that are overhyped and when it starts dumping they sell them rather than accumulate more of them.
In the long term, the market eventually goes up and one needs to know the law of compounding and invest more when the market dumps but the opposite happens and they lose out on their capital. The poorer get poor and the richer get richer as they have mastered the secret of long-term compounding.
Invest Early and slowly !!
What is Bullish divergence?Hey everyone! 👋
Last week, we explained some of the basics to know when it comes to understanding divergences in the markets. If you haven’t read that post, be sure to check it out here: 👇
In this post, we are going to examine bullish divergence further, along with a few exhibits. Please remember this is an educational post to help everyone better understand investing and trading principles. In no way are we trying to promote a particular style of trading!
Table of contents:
1. What is bullish divergence?
2. Types of bullish divergence
3. Some examples
When the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, it is called divergence. Divergence warns about potential underlying weakness in the current trend.
What is bullish divergence?
A bullish divergence occurs when prices fall to a new low while the oscillator fails to reach a new low (exception being hidden bullish divergence). Positive divergence signals that the price could start moving higher soon. Generally, a bullish divergence occurs at the end of a downtrend. It has two sub-types:
- Regular Bullish divergence
- Hidden Bullish divergence
What is classic bullish divergence?
The classic bullish divergence occurs at the end of a bearish trend and indicates that a trend reversal may occur soon. In this, the price and the oscillator always either form lower lows or equal lows. It can be subdivided into 3 types, based on the strength.
1. Strong Bullish Divergence
In strong bullish divergence, the price forms lower lows but the oscillator forms higher lows. This means that the sellers are not selling at the same momentum i.e. the selling momentum is decreasing.
Price : Lower lows
Oscillator : Higher lows
Exhibit: Strong Bullish Divergence
Exhibit: Strong bullish divergence followed by a reversal
2. Medium Bullish Divergence
The price makes double bottom (almost the same level as the previous low) and the oscillator makes higher lows. This indicates that at the same price levels, the momentum is increasing.
Price : Equal lows
Oscillator : Higher lows
Exhibit: Medium bullish divergence
Exhibit: Medium bullish divergence followed by a reversal
3. Weak Bullish Divergence
In this, the price makes lower lows but the oscillator has almost equal lows. This means, that even though the price is decreasing, the momentum is intact.
Price : Lower lows
Oscillator : Equal lows
Exhibit: Weak bullish divergence
Exhibit: Weak bullish divergence followed by a reversal
What is hidden bullish divergence?
The Hidden divergence occurs during the correction phase of a trend and is a possible sign of a trend continuation. In this, the price forms higher lows, but the oscillator forms lower lows. This indicates that even at a decreasing momentum, there is enough buying going on to push the price upwards. This type of divergence occurs with less frequency as compared to the other types.
Price : Higher lows
Oscillator : Lower lows
Exhibit: Hidden bullish divergence
Exhibit: Hidden bullish divergence followed by a reversal
Thanks for reading! As we mentioned before, this isn't trading advice, but rather information about a tool that many traders use. Hope this was helpful!
See you all next week. 🙂
– Team TradingView
Feel free to check us out on Twitter and Instagram ! 💘
How To Read Neowave Charts by Neowave ForecastHello Traders and Investors
My Name is Manish Singh and i am an expert in Neowave. In this chart i have describe the coding method to read my charts.
In Neowave Charts Degree labels used as intermediate, primary and cycle degree which is hard to understand by new user. Actually they understand 1 to 5 labels but they dont get the quiet idea in one look in which trend is this count is given. Thats why i came up with something simpler. So i am publishing this in the hope they everyone new trader easily understand the chart that it is in corection or in motive wave and for what time frame.
As they follow my charts, than with time they will understand which degree takes how much amount of time approximately to complete its structure and it surely does in learning the neowave.
Anyway friend kindly tell how you like the idea of this kind of coding.
I am also puting some examples of chart here.
1) This is the chart of nifty in which long term wave is in correction and you can judge with the help of medium wave degree that where is long term wave correction can end or actually new trend is going to start now or it become a failure. you can judge the chart pattern with is also as you can see this is an flat structure.
2) This is another chart of USD/JPY
In this chart i have used the old style of coding so that you can compare which one is easier to understand trend. As you can clearly understand with the help of count that it is going up but you were unable to catch that in which degree it is up or how long it will sustain there. Is there much bigger degree from the current one i am seeing.
How to avoid sudden market selling?Using #BTST (Buy today, Sell tomorrow) trades, you can avoid sudden market selling like today.
How?
- When you take BTST trades, you usually ride the momentum and are only in the market for a few minutes.
- For example, I typically buy stocks at 3:25 p.m. and sell them the following morning at 9:15 a.m., so technically I am only in the markets for 5-10 minutes every day, reducing my exposure and, consequently, the risk I face.
- No one can predict the next market downturn, but you can work to reduce your exposure to the risk of a downturn.
- We can adjust the amount of capital we put into BTST trades because we are taking new positions on a daily basis.
Because we take new positions every day with BTST trades, we can adjust the amount of capital we put into the markets based on the current market conditions.
- In comparison to BTST trades, swing trades can turn any profitable trade that you have been holding for many days upside down in a matter of minutes, and you must actively track them every day.
- Because we have specified targets with BTST, we can exit them early and avoid this risk as well.
Trading -- Five Common Psycho-HurdlesFear of Missing Out
------------------------
You missed a great opportunity yesterday. You take it as a mistake and don’t want to repeat it. So, today you enter in a hurry, deviating from your edge/strategy thinking that you will nail it this time. But that might not be the case.
Missing an opportunity, because it was not in-line with your back tested strategy, was perfectly fine. You were still following the right path. But after missing a couple of rallies, you decided not to miss the next one. This leads to disaster.
If you are missing too many opportunities and want to deal with it, then think of modifying and back testing your strategy.
Revenge Trading
---------------------
You take a long trade in the morning and stopped out in the just 15 minutes. You don’t digest this loss and want to recover quickly. So, you not just reverse your position but also double it. In the next candle market again stops you out, multiplying your losses.
Your first loss was still ok to bear with. But reversing and doubling was an absolute blunder. If you enter into a position as, per your edge, and got stopped out then consider it as a drawdown that one can face in any strategies. There are no peak without a valley. If you miss a valley, you will surely miss the peak too.
Greed Entering your Mind
--------------------------------
“If you do not book profits, you will book loss.”
You need to define two things while trading: risk involved and potential gain. If you have taken a trade and its not in favor, just do not average to bring down the cost. This oversize your position and eventually multiplies the risk.
Also, if you have set targets (price target or profit amount target), just exit (at least partially) there. Taking out profit from the market is of utmost importance as this is the prime objective of this business.
Waiting for too long, when in profit, may bring you back to breakeven in a volatile event. But if your strategy says to trail a profitable position, its perfectly fine to do so as you will be locking your profits.
Paper loss is Not Real
---------------------------
Suppose you entered a trade at 500 and your stop loss is 490. The stock starts turning down and your PnL is in red. The stock is at 492 but your brain says its loss. This impression is so powerful that you could not stop yourself from closing the trade.
You placed the SL as per your plan. Any loss that you see before your SL hits is just a paper loss. You SL defines your real loss.
Lack of Discipline
----------------------
All the above hurdles result into lack of discipline, which stops you from being profitable.
You have to have a strategy/edge in the market with some back testing. Then you need to strictly follow that edge. You may tinker a bit with your edge if it is needed.
Discipline is nothing more than religiously following your plan of action. Putting efforts to train your brain against all the above psychological hurdles can make you a disciplined trader over a period of time.
There might be more psychological hurdles but I think these are the crucial ones to deal with.
Do like and share for such posts in future.
Can you predict such falls? Fibonacci Retracements - (bad audio)Market fall may have taken few by surprise, but followers of price action techniques should have this scenario in their plan. Trend analysis (or Elliot wave analysis) along with Fib Retracements could be of enormous help if used in tandem with price action. They at least give you minimum target and levels, so that you are able to ride the trend and also do not make impulsive entry decisions.
(Disclaimer: the audio quality is really bad. Somehow the system is not allowing external mic and using internal mic which is capturing lot of noise. Tried typical methods but not working. If you have solution let me know)
Head & Shoulder PatternHead & Shoulder Pattern. How to filter out pattern for trading with more possibility of success and entry before breakout.
'Inside' Story of 'Inside' Candle !!!! -> Definition of Inside Candle
As the name suggests, an inside bar chart pattern engulfs the inside of a large candle, some call it a mother bar. It’s a pattern that forms after a large move in the market and represents a period of consolidation.
The inside bar pattern can be a very powerful price action signal if you understand how to trade it properly. Matching lows and highs are acceptable, however, the inside bar’s range must not be outside of the mother candle by even 1 point.
-> Facts about Inside Candle
Inside bar pattern within the trading range (or shadow) of the preceding bar.
It is at least a two candlestick formation.
Mother candlestick can be either bullish(green) or bearish(red).
The inside bar chart pattern can be bullish or bearish.
Inside bar setup.
-> Procedure to trade Inside Candle
Entering: – When the price action completes an inside candlestick chart pattern, you should mark the low and high of the Inside Bar consolidation range. These two levels are used to trigger a potential trade.
Remember, the inside candle clues us into the eventual breakout and likelihood of a continuation outside the range in the direction of the break, however, it doesn’t give us information about the direction of the breakout through the range, prior to the actual move.
In simple terms, if the price action interrupts the range upwards, then you should go long. If the price action breaks the range downwards, then you should trade the short side.
Exiting: – Projecting the potential move with Inside Bar Breakouts can be challenging. Often inside bar trades can lead to a prolonged impulse move after the breakout, so employing a trailing stop loss after the price has moved in your favor is a smart trade management strategy.
Stop Loss: – In either case (If you are Long or short), your stop should be located below the bottom of the range, as stated in the picture below. There can be a buffer of 1% below the range.
-> Inside Candle helps to identify change in trend
The inside bar candlestick pattern is such a valuable tool because it tells us that the market is not as bullish or bearish as it was in the preceding period.
Being able to identify periods of market expansion and contraction will help any trader improve their odds of finding a winning trade because we know from history that expansion and contraction can only last so long.
When either of those market phases ends, the resulting moves can be explosive!
My OBSERVATION -> It is more effective if used with RSI i.e. when RSI is greater then 70 and inside candle is formed , that spot is best for shorting,
and if RSI is less then 30 and inside candle is formed , that spot is best to go long.
Magical Parallel Channel : Dynacons Sys SolutionDSSL BO with huge volume with support/demand zone found on the magical Parallel channel. Stock is finding good support in the zone of 250-260, rest we can plan the trade as levels mentioned on the chart
Case Study 1 - Reliance Industries -
Long Term Magical Parallel Channel : we can clearly see the price has respected the parallel channel in a magical way, 1996-1997 3 point touch parallel channel support HELD in 2015-2016-2017 & Mar 2020 crash too. #relianceind
Case Study 2 - Tata Steel -
Parallel Channel worked magically in the Tata Steel were price went strongly through the ceiling of parallel channel, creating another parallel channel guided to capture the whole rally in #TataSteel
Case Study 3 - Havells -
Initial Parallel channel was drawn from 2003 base and connected to 2009 low, stock found buyer on the same parallel channel in 2020 crash, even late buyers could have mad +234%. #havells
Case Study 4 - Nifty -
Same Parallel Channel can Help to enter the larger trend by using it in the correction phase, examples are
Case Study 1 - #Nifty
Case Study 2 - #Techm(Tech Mahindra)
Conclusion : Parallelchannel is one of the most powerful tool in the TA & it can be very useful in finding trend and riding most of it.
Hope above examples help in your trading decisions in future, if you find the work useful do LIKE, SHARE & COMMENT...
Wish You Happy & safe trading
Views are for ‘’EDUCATIONAL PURPOSE ONLY’’ trade at your own risk.
"Always Respect Risk"
Happy Trading
Jai Hind Jai Bharat
Stage 2 Breakout & Pyramiding Stage 2 breakout 30week sma and Pyramiding opportunity step by step
Observe RSI range in stage 1 and stage 2
Education purpose
EDUCATION- GRAPHICAL DIAGONAL PATTERN IN DETAIL_ELLIOTT WAVEThis is the educational post regarding the types of diagonal patterns-
SUMMERY :
LEADING DIAGONAL
ENDING DIAGONAL
LEADING DIAGONAL
Always form in inner wave of wave (1), so one can expect wave(2,3,4 & 5) within main impulse wave to complete the pattern.
PATTERN:
1- Comprises of (5-3-5-3-5 (inner waves)) or (3-3-3-3-3) (inner waves)
2- wave (4) always overlaps wave (1), but can't go beyond origin of wave (1)
3- wave (3) > wave (1) & wave (5) could be >than wave(1)
4- wave (3) max projection 161.8% (fib ratio) and it can't be shortest wave among all waves
5- wave (5) can't truncate
6- wave (5) max projection 61.% of wave (1) and wave (3), but can't go beyond line joining wave (1) and wave (3)
7- LD can either be expanding(ED), converging (CD) or parallel wedge
To enter in this pattern one should wait for the complete formation of LD and enter after completion of wave (2) after completion of LD !
ENDING DIAGONAL
Always form in inner wave of wave 5 of any impulse. Whenever you are observing, something like ED, one should make sure wave (1), wave (2), wave (3) and wave (4) has been completed so far.
PATTERN
1- Inner structure (3-3-3-3-3) (5 sub waves in total)
2- wave (1), (2) &(3) is always a simple zig-zag
3- wave (2) & (4)could be anything within (a-b-c) pattern
4- Here also, wave (1) and wave (4) overlaps as of LD
5- Wave (3) can't go beyond 161.8% (fib level), as of LD
6- wave (5)can be > = 61.8% of wave (1) and (3) but can't go beyond line joining wave (1) and wave (3)
To enter in this pattern one should wait for the complete formation of ED and enter after completion of wave (5) after completion of ED !
Running triangle Leading and Ending Diagonals
Comparison between Running triangle-Leading and Ending Diagonals
Chart 1 depicts a theoretical structure of Running triangle and an ending diagonal in a down trend.
As mentioned the comparison is in a downtrend. Accordingly downward move is termed as directional move and move to the upside is termed as non-directional.
A running triangle has non-directional momentum ie faster moves to the upside (wave A, C and E) than the downward moves (Waves B and D). These non-directional moves donot retrace the previous move completely.
On the contrary, Ending diagonal has directional momentum ie faster moves to the downside (waves 1, 3 and 5) in the direction of trend and these downward moves completely retrace the previous non-directional corrective moves (wave 2 and 4).
Chart 2 depicts a theoretical structure of Running triangle and an ending diagonal in an uptrend.
Differences in a running triangle and leading diagonal is opposite to that mentioned for downtrend.
As mentioned the comparison is in an uptrend. Accordingly upward move is termed as directional move and move to the downside is termed as non-directional.
A running triangle has non-directional momentum ie faster moves to the downside (wave A, C and E) than the upward moves (Waves B and D). These non-directional moves donot retrace the previous move completely.
On the contrary, Ending diagonal has directional momentum ie faster moves to the upside (waves 1, 3 and 5) in the direction of trend and these upward moves completely retrace the previous non-directional corrective moves (wave 2 and 4).
always set stop loss in system if you trade in any instrument always set stop loss in system if you set stop loss in mind then this type of market you cannot handle
The Darvas Box TheoryThe Darvas Box Theory is a trading method that is based on stock momentum. The momentum theory basically suggests that stock prices that have previously climbed are more likely to do so again in the future. Stock prices that were falling previously are more likely to fall again in the future.
By drawing boxes around the highs and lows throughout time, the idea provided insight into when to enter and depart certain positions. It encourages practitioners to only take long positions in rising boxes and to set exit points based on the highs of such boxes. As a result, if the price of a stock falls below that exit threshold, the stock should be sold.
> When the price moves between a horizontal support and resistance levels, it forms a rectangle.
> As the price goes up and down between support and resistance, the pattern shows that there is no trend.
> When there is a breakout and the price moves out of the rectangle, the rectangle comes to an end.
> Some traders prefer to trade rectangles by buying around the bottom and selling or shorting towards the top, but others prefer to wait for breakouts.
During rectangles, there are a lot of false breakouts. Some traders prefer to wait for a false breakout before entering a trade in the hope that the range would persist.
Some breakouts result in massive profits when the price explodes out of the rectangle with a large move. Many rectangles will have little price movement towards the end. In certain circumstances, the price moves outside of the range and then returns to it.
What is divergence?If you have been in the market for some time, you may have heard of something called “divergence” . Today we are going to share an informative write-up along with a few exhibits that may help you solidify your understanding of this important trading concept. This post will also lay the groundwork for future posts about related topics.
Please remember this is an educational post to help all of our members better understand various concepts used in trading or investing. This in no way promotes a particular style of trading!
We are going to cover the following topics:
1. What is divergence?
2. What are the different types of divergence?
- Bullish divergence or Positive divergence
- Bearish divergence or Negative divergence
Introduction
When the price of a stock moves in a certain direction, the momentum oscillator should also move in the same direction.
Example : When the Price makes a higher high, the momentum oscillator should also make a higher high. This is called convergence since both the price and the momentum are converging in the same direction.
In a few circumstances, the momentum oscillator and the price do not move in tandem. This is called Divergence.
What is Divergence?
When the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, it is called divergence. Divergence warns about potential underlying weakness in the current trend. The price may or may not reverse at the exact occurrence of the divergence.
Different types of Divergence
Broadly, divergence can be classified as positive or negative. Positive divergence is also known as “Bullish divergence”, while the negative divergence is typically called “Bearish divergence.”
1. Bullish divergence / Positive divergence
A bullish divergence occurs when prices fall to a new low while the oscillator fails to reach a new low (exception being hidden bullish divergence). Positive divergence signals that the price could start moving higher soon. It has two sub-types:
i) Regular Bullish divergence
ii) Hidden Bullish divergence
Some exhibits of Bullish divergence:
Exhibit 1: Regular bullish divergence
Exhibit 2: Hidden bullish divergence
Exhibit 3: Bullish divergence followed by a subsequent reversal
2. Bearish divergence/Negative divergence
A bearish divergence occurs when the price rises to a new high while the oscillator fails to reach a new high (exception being hidden bearish divergence). Negative divergence signals that the price may soon start falling to lower levels in the future. It also has two sub-types:
i) Regular Bearish divergence
ii) Hidden Bearish divergence
Some exhibits of Bearish divergence:
Exhibit 1: Regular bearish divergence
Exhibit 2: Hidden bearish divergence
Exhibit 3: Bearish divergence followed by a subsequent reversal
Thanks for reading! As we mentioned before, this isn't trading advice, but rather information about a tool that many traders use. Hope this was helpful!
See you all next week. :)
– Team TradingView
PART A GRAPHICAL ELLIOTT WAVE IMPULSIVE VIEWTopics covered:
1- Impulsive Elliott wave pattern.
2- Impulsive and Corrective pattern locations.
3- Possible types of pattern.
4- Fibonacci ratio's in brief
5- Rules and Guidelines
Next topic to be coved is Leading diagonal!
EDUCATION- ABC PATTERN IN NIFTY- ELLIOTT WAVEThis is the educational post, regarding how ABC- Zig-Zag pattern looks like, how it is formed and what are the possibilities regarding targets targets and stop-loss.
1- basic structure for wave ABC.
Here, wave A starts from 0 (starting point of wave A) to A (end of wave A) wave A completes here.
Next, wave B starts from A (end of wave A) to B (end of wave B) wave B completes here.
Next, wave C starts from B (end of wave B) to C (end of wave C) wave C completes here.
2- Sub Structure
Wave A consists of 5 wave structure (wave1,2,3,4,5)
Wave B consists of 3 wave structure ( wave a,b,c)
Wave C consists of 5 wave structure (wave1,2,3,4,5)
Wave A & C must fulfill all conditions of impulsive wave where as wave B must satisfy all conditions of corrective wave.
NOTE: we have shared chart on daily time frame and in our educational post we taking 1 hour time frame for better understanding
I have marked wave A, wave B and wave C on 1 hour timeframe with sub wave counting for better understanding.
Impulsive wave conditions:
impulsive subdivides into 5 sub-waves, where, wave 1,3,5 are impulsive and wave2,4 are corrective
wave 2 cannot retrace 100% of wave 1
within all three impulsive waves wave 3 cannot be shortest
wave 4 cannot ends in wave territory of wave 1
Their must be some alteration within wave 2 and wave 4
Now after wave A formation, we must confirm it's ending and should wait for corrections.
Retracements should be confirmed with fib correction tool and corrections could end somewhere between 3% to 61%. (refer diagram)
Wave B must consists of corrective wave structure i.e. A,B,C (corrective wave could be any one of following: Zig Zag, Flats, Extended Flats & triangles, double threes, triple threes etc. shall cover all patterns in nest post!)
Now again when wave B gets end and confirmed, one must start looking for trade possibilities in wave C, as Wave C is the most powerful among all corrective wave structure. (trend based fib extension tool made used for finding targets of wave C)
Normally wave C must end after extending 100% of wave A ( normal conditions) and in extended conditions it must ends somewhere 100% to 161% or even more.
Large Base Can Potentially Find ''MULTIBAGGER STOCKS''Nagreeka Exports has BO of long 4.3 yrs base with 7x volume . Can be bought on every dips for the target levels as mentioned on the chart.
Educational Points
Large Base
1 - Early rally
2 - First point of profit booking/sell off
3 - Base formation after profit booking/sell off - this is the point to consider adding the stock to the watchlist(supply getting absorbed) but not in the buy list.
4 - Smart Money action, taking the prices to the previous high which should act as a resistance
5 - JOIN THE PARTY AT BREAKOUT, Important point to consider is Volume at BO
6 - Conservative Confirmed Buying
Examples of Large Base Formation could be Nagreeka Exp
Wish You Happy & safe trading
Views are for ‘’EDUCATIONAL PURPOSE ONLY’’ trade at your own risk.
"Always Respect Risk"
Happy Trading
Jai Hind Jai Bharat
Educational Post Ascending Channel**** Educational Post:
ASCENDING CHANNEL
An ascending channel is the price action contained between upward sloping parallel lines. Higher highs and higher lows characterize this price pattern. Technical analysts construct an ascending channel by drawing a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs.
The pattern’s opposite counterpart is the descending channel.
KEY TAKEAWAYS
1. An ascending channel is used in technical analysis to show an uptrend in a security’s price.
2. It is formed from two positive sloping trend lines drawn above and below a price series depicting resistance and support levels, respectively.
3. Channels are used commonly in technical analysis to confirm trends and identify breakouts and reversals.
****Trading the Ascending Channel
1. Support and Resistance:
Traders could open a long position when a stock's price reaches the ascending channel’s lower trend line and exit the trade when the price nears the upper channel line. A stop-loss order should be placed slightly below the lower trend line to prevent losses if the security’s price abruptly reverses.
2. Breakouts:
Traders could buy a stock when its price breaks above the upper channel line of an ascending channel.
3. Breakdowns:
Before traders take a short position when price breaks below the lower channel line of an ascending channel, they should look for other signs that show weakness in the pattern.
The Rising Wedge PatternA rising wedge is a bearish pattern when it appears at the top of a mature uptrend. It signifies that a potential top might be in the offing. The duration (short/medium/long term) of the top depends upon the timeframe on which it appears.
Preconditions
------------------
> A strong mature (multi-day/week)trend in the background
> Wave HH1 to be extremely smaller than H
> HH2 should be smaller than HH1
> HH-HL structure results into a rising wedge or arrowhead
> It should appear at the potential top of a rally
> Wave LL has to be snappier/abrupt/faster than wave HL & L
Volume characteristics
----------------------------
> The volume in HH1 is generally less than volume in wave H
> Volume in HH2 is less than volume in HH1
> Volume in wave LL should be higher than volume in wave HL and L
Confirmation
-----------------
> Wave LL breaks the low of wave HL
Psychology
--------------
> Weak character of waves HH1 & HH2 with shortening of length and lesser volume means buyers are not interested at these levels
> Breakout buyers trapped above H and HH1
> Sharp wave LL with increasing volume suggest that sellers are taking over and a potential medium to long term top may be in place
Trading
---------
> Book profits full/partial, in any long position, at the break of HL
> Risk takers short at the break of HL but risk in may be large as stop loss (above HH2) could be wide
> Other may wait for a pullback on the upside (after break of HL); price often reverts back to average prices where short position can be taken
> Always try to minimize risk, either by reducing position size or otherwise
Do not forget to like/comment/share for more updates in future.
Thanks for reading
#Education #update ****Educational Post:
Head and Shoulder pattern
Head and shoulders is a chart pattern in which a large peak has a slightly smaller peak on either side of it. Traders look at head and shoulders patterns to predict a bullish-to-bearish reversal.
Typically, the first and third peak will be smaller than the second, but they will all fall back to the same level of support, otherwise known as the ‘neckline’. Once the third peak has fallen back to the level of support, it is likely that it will breakout into a bearish downtrend.
****Educational Post;
Bearish Flag
The bearish flag is a candlestick chart pattern that signals the extension of the downtrend once the temporary pause is finished. As a continuation pattern, the bear flag helps sellers to push the price action further lower.
These three elements are integral for the bearish flag to occur:
The flagpole - the asset’s price must trade lower in a series of the higher highs and higher lows;
Flag - a consolidation must take place between two parallel trend lines in an uptrend;
A breakout - a break of the supporting trend line signals the activation of the pattern.
Gold's Golden Rule Of 89% (Pack Your Bags For Big Ride)Gold's Golden Rule Of 89%
Golden history of last 50 years have shown that Gold has give big move whenever there is a minimum 89% move from bottom. Chart is self explanatory. There are three successful incident of min 89% move and two unsuccessful incident of less than 89% move.
Successful Incidents
1. 1970 - 1972
2. 1976 - 1978
3. 1999 - 2005
Unsuccessful Incidents
1. 1982 - 1983
2. 1985 - 1987
Fourth move in the making from 2015 - till date. So Gold is getting ready to fly again.
Disclaimer: This is for demonstration and educational purpose only. This is not buying or selling recommendations. I am not SEBI registered. Please consult your financial advisor before taking any trade.
