ADANIPORTS ANALYSIS200 DMA is a great simple strategy which provides good RR trades such as this one.
The idea here is simple. Markets tend to be range bound 80% of the time, which is called the contraction phase. The other 20% of the time the market is breaking out, called the expansion phase.
To win the game, it is important to understand the probabilities and play the probabilities.
For the price to breakout above key resistance levels and breakdown below key support levels, there has to be a catalyst that enables this to happen. The catalyst can be macro-economic news, good/poor earning reports, breakout of war, elections etc.
Such news comes about often but is still rather rare. Range bound trades enable a higher probability of success and lower risk as the stop loss that one can place is closer to the price. A breakout trade on the other hand will have a stop loss on the other extreme of the range, increasing the risk significantly.
Hammer pattern which has been formed on this chart is a good indication of a a fresh bearish move starting. It shows that the higher prices have been rejected yet again.
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