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Supply and Demand

How moving average works on chartsHello mates sharing a view How Moving Averages Work A moving average works by calculating the average price of a security over a specific period of time, and then updating that average as new price data becomes available. The purpose is to help eliminate noise (short-term price fluctuations) to provide a clearer view of the underlying trend. Types of Moving Averages Simple Moving Average (SMA) Definition: The most basic type of moving average. It is calculated by taking the arithmetic mean of a security’s price over a specified number of periods. Formula: SMA=Sum of closing prices over a periodNumber of periods SMA=Number of periodsSum of closing prices over a period​ Example: A 10-period SMA adds up the last 10 closing prices and divides by 10. As each new closing price comes in, the oldest price is dropped, and the new price is added. Use: The SMA smooths out price data and provides a basic view of the average price over the chosen period. Exponential Moving Average (EMA) Definition: A more sophisticated type of moving average that gives more weight to recent prices, making it more responsive to price changes compared to the SMA. Formula: The calculation is more complex than the SMA but it’s designed to give more emphasis on the latest price data. Use: The EMA is often preferred in volatile markets because it reacts more quickly to price movements, providing more timely signals. Weighted Moving Average (WMA) Definition: Similar to the EMA but with a simpler calculation. It assigns a specific weight to each data point, with more weight placed on the more recent prices. Use: Like the EMA, the WMA is more sensitive to recent price changes compared to the SMA. Common Periods for Moving Averages Short-Term (Fast) MAs: 9, 10, 20 periods (e.g., 10-day or 20-day SMA or EMA) Medium-Term MAs: 50 periods (e.g., 50-day SMA or EMA) Long-Term (Slow) MAs: 100, 200 periods (e.g., 200-day SMA or EMA) Key Uses of Moving Averages Trend Identification Uptrend: When the price is above the moving average, it signals an uptrend. Downtrend: When the price is below the moving average, it signals a downtrend. Sideways (Neutral) Trend: When the price moves sideways and stays close to the moving average, this indicates no clear trend. Support and Resistance Levels Moving averages can act as dynamic support and resistance levels. In an uptrend, the price might repeatedly bounce off a moving average, using it as support. In a downtrend, the moving average might act as resistance. For example, in a strong uptrend, the 50-day or 200-day moving average might act as a support level, where price tends to pull back to and then bounce up again. Crossovers (Golden and Death Crosses) Golden Cross: A bullish signal occurs when a short-term moving average (like the 50-day SMA) crosses above a long-term moving average (like the 200-day SMA). This is seen as a confirmation of an uptrend. Death Cross: A bearish signal occurs when a short-term moving average crosses below a long-term moving average. This is seen as a confirmation of a downtrend. Momentum and Buy/Sell Signals When the price crosses above a moving average: This is often considered a bullish signal, suggesting that an upward trend could be starting. When the price crosses below a moving average: This is typically a bearish signal, suggesting a potential downward trend. Smoothing Volatility By averaging out price data over a set period, moving averages help reduce the "noise" of daily price fluctuations and provide a clearer view of the overall trend. How to Use Moving Averages in Charts Plotting Moving Averages: On most charting platforms, you can easily overlay a moving average by selecting the tool from the indicators list and choosing the period (e.g., 50-day or 200-day). Adjust the Time Period: You can experiment with different time periods to adjust the sensitivity of the moving average. Shorter periods (e.g., 10-day) react faster to price changes, while longer periods (e.g., 200-day) provide a smoother, slower-moving trend line. Example of Using Moving Averages Trend Confirmation: If the price is consistently above the 50-day moving average, the market is likely in an uptrend, and you might look for buy opportunities. If the price is consistently below the 50-day moving average, the market is in a downtrend, and you might look for sell opportunities. Golden Cross (Bullish Signal): Suppose the 50-day SMA crosses above the 200-day SMA — this is the "Golden Cross," a classic signal that suggests the start of a strong uptrend. Traders may start looking for long (buy) positions. Death Cross (Bearish Signal): Conversely, if the 50-day SMA crosses below the 200-day SMA, it forms a "Death Cross," signaling a potential downtrend, and traders may look for short (sell) opportunities. Using Moving Averages as Support/Resistance: In an uptrend, the price might pull back toward the 50-day moving average and then bounce back up. This makes the 50-day MA act as a dynamic support level. In a downtrend, the price might approach the 50-day MA and then reverse downward. This makes the 50-day MA act as a resistance level.
NSE:NIFTYEducation
by MISSION_TRADING
How to draw support and resistance level on chart1. Identify the Trend Support: This is the price level where a downtrend can pause or reverse. It occurs when buyers are expected to step in and push the price upward. Resistance: This is the price level where an uptrend can pause or reverse. It occurs when sellers are expected to step in and push the price downward. Key tip: The more times the price touches a particular level and reverses, the stronger the support or resistance. 2. Locate Significant Highs and Lows Support: Look for the lowest points where the price has previously bounced. These are the bottoms where price failed to drop further. Resistance: Look for the highest points where the price has previously been unable to break through. These are the tops where price failed to rise further. Key tip: You want to find significant turning points — areas where price made a sharp reversal. 3. Use Horizontal Lines to Mark Levels Support: Draw a horizontal line along the most recent low or lows where price reversed or consolidated. This will mark the support zone. Resistance: Draw a horizontal line along the most recent high or highs where price reversed or faced rejection. This will mark the resistance zone. Key tip: You can use multiple points to validate a support or resistance level. If a price has touched and reversed at the same level multiple times, it becomes more reliable. 4. Adjust for Areas (Zones, Not Just Exact Price Points) Often, support and resistance are not exact price points but zones where price action tends to cluster. For example, if a stock often bounces between $100 and $105, you might draw a support level around $100-105 rather than at one specific price. Key tip: Consider the range of price movement around these levels. Drawing the lines as zones can provide more flexibility for trading. 5. Look for Volume Confirmation High trading volume near a support or resistance level adds strength to the level. A breakout or breakdown accompanied by high volume suggests that the level is more significant. Key tip: Pay attention to volume spikes when the price approaches key support or resistance levels. This may indicate that a breakout or breakdown is imminent. 6. Dynamic Support and Resistance These levels are not always static. Trends can create dynamic support (in uptrends) or dynamic resistance (in downtrends), where support or resistance is aligned with trendlines or moving averages. Key tip: In trending markets, you can use tools like trendlines or moving averages (like the 50-day or 200-day moving average) to spot dynamic support and resistance. 7. Check for Price Patterns Price patterns such as triangles, channels, or head-and-shoulders can also help you identify key support and resistance zones.
NSE:BANKNIFTYEducation
by MISSION_TRADING
What is Price Action ? Beginners Guide in Easy Steps Part -2In our previous discussion, we delved into the fundamental techniques of reading a price chart with key price action strategies. This time, we're set to expand our understanding even further. By the end of this article, you'll have a fresh perspective on analyzing charts and interpreting price movements, empowering you with deeper insights and more confident trading decisions. 1. Identify the direction of trend with the help of price action candlesticks a.)Strong Uptrend: Green candlesticks moving upwards continuously. Indicates strong buying pressure with no selling pressure. b.)Uptrend with Deep Retracement: Green candlesticks with some pullbacks. Sellers present, causing temporary price dips. c.)Indecisive Market: Alternating red and green candlesticks. No clear market direction, prices moving up and down without strong conviction. d.)Tight Range Before Breakout: Small red and green candlesticks within a tight range. Usually occurs before a significant breakout. e.)Weak Uptrend with Choppy Price Action: Alternating red and green candlesticks, choppy pattern. Indicates weak buying pressure and strong selling presence. f.)Healthy Uptrend: Green candlesticks with few red ones. Strong buying pressure with minimal selling, indicating a solid upward trend. 2. Importance of Wicks and the closing of candle Wick and a Doji Candle: Indicates early signs of buyers attempting to stop the price decline, If you observe closely there is a wick in previous candle also, on the break of high of the candle price hit trendline resistance and fallen again. Second Wick at the Same Zone: Sellers tried to push the price down again, but buyers stopped it, forming a bullish pin bar. First wick formed a demand zone but the second wick confirmed of buyers activity. After Some Fight, Buyers Win: Buyers managed to push the price up From the range, kicking out the sellers. More Lower Wicks: Indicates both buyers and sellers are active, but buyers are gradually winning, which is bullish. Lower Wick Shows Demand: After a downturn, the lower wick signals demand coming in. Inside Bar with Bigger Upper Wick: Shows bearish bias. The break of the low led to the continuation of the fall. NOTE: Wicks are an early indication of demand or supply presence, but the location of formation will be more important.It would help if you determined whether it's in an uptrend, downtrend, or range. 3. Multiple Candle Rejection A)Exhaustion Gap: At one point, the chart shows a gap up, where the opening price equaled the high of the day. This indicates an exhaustion gap, suggesting potential for a larger correction. Despite this, only a single bar correction occurred initially, showing resilience. B)Brutal Correction: A sharp, one-bar correction is seen, followed by buyers trying to push the prices back up within the same candle. This indicates a strong fight between buyers and sellers. C)Inside Bars and Tight Range: The presence of multiple inside bars with tight ranges and prominent lower wicks signals consolidation and market indecision. This is a period where neither buyers nor sellers dominate, often preceding a significant move. D)Break and Continuation: Eventually, the price breaks and closes above the range of the inside bars. This breakout triggers a continuation of the uptrend, evidenced by the subsequent series of green candles and higher prices. #Understanding Candlestick Wicks: Wicks/Tails: These are crucial as they indicate early signs of demand or supply. In this chart, the lower wicks suggest that buyers are stepping in at lower prices, even during pullbacks, showing underlying strength. 4.Importance of Close Of Candle If you wait for close of the Candle beyond support or resistance zone then it can help you take high-probability entries only and avoid fake breakouts. Fake breakout means when the price breaks the support or resistance area but it failed to sustain beyond that area and quickly comes inside the range. That's all for today's idea I hope you have gained good insights into how to read market direction with the help of candlesticks structure If you read market direction in consideration with the factors explained in Part 1 then the outcomes will be Great. If this idea helped you learn something new hit the boost button and share with your friends, Stay tuned new ideas in this series coming soon. Keep Learning, Happy Trading. NSE:NIFTY
NSE:NIFTYEducation
by SANJAYPATIDAR_
2
Navigating the Bullish Surge: A Cautious Approach to InvestingThe Indian markets are experiencing an extraordinary rally, with major indices soaring to unprecedented heights. This surge is undoubtedly enticing for retail traders and investors eager to capitalize on the momentum. However, the pressing question remains: Are these elevated levels truly the right time to enter the market? Perhaps not. To gain insight, we can turn to a diagram by Dr. Jean-Paul Rodrigue that illustrates the typical stages of a market bubble. When we overlay this framework onto the current landscape of Indian indices, it becomes apparent that we may be on the brink of significant market movement—potentially in the coming weeks. History has shown us that markets can swing from euphoric bullishness to sharp corrections. Notable examples include the catastrophic crash of 2008 and the rapid declines during the COVID-19 pandemic in 2020. While we may not face declines as drastic as those events, it’s essential for retail traders to be proactive in safeguarding their investments. One effective strategy to mitigate downside risk is to consider purchasing long dated put option. A put option provides the holder with the right to sell the underlying asset without the obligation to do so. This means that if the market experiences a downturn—whether in the immediate future or after a few weeks or months—the put option can yield significant profits during a substantial decline. On the flip side, if the market continues its upward trajectory, the put option will gradually lose value and may eventually become worthless as indices continue to set new records. The key takeaway here is to keep your investment strategy straightforward and avoid unnecessary complexity. This is merely one of many strategies available for investors looking to protect their portfolios. Final Thoughts: As we navigate these exciting yet unpredictable market conditions, it’s crucial to remain vigilant and informed. While the allure of all-time highs is compelling, prudent risk management is essential for long-term success in investing. Disclaimer: All investments carry inherent market risks. This article is not a recommendation; please conduct your own analysis before making any trading or investment decisions.
NSE:NIFTYEducation
by VishalSubandh
Unlocking Options Trading : The Power of Demand and Supply Part1The Indian options market has experienced a remarkable growth of nearly 8 times since the pre-COVID era. This surge in volume and transactions has created new opportunities for retail traders and investors. While the NSE initially traded only Nifty and Bank Nifty, it now offers a wider range of indices like Midcap Nifty, Nifty Financial Services, Sensex, and Bankex. Despite increased participation, liquidity remains a concern for some instruments. This article explores how the Demand and Supply strategy can be applied to options trading. I have been personally trading demand and supply strategy for over 13 years and have seen the power of this strategy working for any asset class for that matter be it the Indian markets or even the Global markets. Now the question arises can we use the Demand and Supply strategy for trading options and the plain simple answer is “Absolutely Yes!!”. Today I am going to show how we can combine demand and supply and Options together to gain a superlative edge. Let us basically talk first about what is a demand zone? A demand zone is an area on the price chart where price has significantly moved to the upside creating a footprint of “Strong Buyers” and a supply zone is an area on the price chart where price has moved down significantly creating a footprint of “Strong Sellers”. As you can see in the above chart I have plotted the demand zone(Green) and supply zone(Red). These are the areas on the price chart where one can expect the price to turn. Now if one want to switch gears and trade options what are the options that are available for a trader. a. Upside Movement( Demand Zone) b. Sideways Movement ( Middle of Demand & Supply) c. Downside Movement( Supply Zone) So the trader first needs to identify where the price is in context of the Demand and Supply zones. If the price is closer to Demand one can plan a bullish trade, if price is closer to supply zone one can plan a bearish trade and if prices are in the middle one can plan a sideways trade. As per the above example price is closer to a supply zone on the BNF so it will be more prudent for the trader to setup a trade in Options with a bearish perspective based on the demand and supply strategy. In the world of options there are 2 types : 1. Call Options 2. Put Options Buying Calls gives the right to buy and buying puts give the right to sell however one can even sell options and when one does that he has the obligation to sell in case of calls and obligation to buy in the case of puts For an absolute layman this makes the process of understanding options a lot harder than what options actually are so we are going to breakdown these 4 positions and corelate these 4 positions with demand and supply. As an options trader one can create 4 positions. 1. Buy Call 2. Buy Put 3. Sell Call 4. Sell Put We are going to break down these 4 positions into simple mathematical signs to arrive at a decision that out of the above 4 options strategies which is to be implemented in Demand Zone and which one is to be implemented in a Supply Zone. Let us break down these 4 positions as follows : Buy --> “+” Calls-->“+” Sell --> “-“ Puts -->”-“ 1. Buy Calls => + * + = + Since the outcome is positive, we always implement a positive position at a Demand Zone therefore Buy Call as a strategy should be implemented only at Demand and cannot be implemented at Supply 2. Buy Puts ==> + * - = - Since the outcome is negative, we always implement a negative position at a Supply Zone therefore Buy Put as a strategy should be implemented only at Supply and cannot be implemented at a Demand Zone 3. Sell Calls --> - * + = - Since the outcome is negative, we always implement a negative position at a Supply Zone therefore Sell Call as a strategy should be implemented only at Supply and cannot be implemented at a Demand Zone 4. Sell Puts --> - * - = - Since the outcome is positive, we always implement a positive position at a Demand Zone therefore Sell Put as a strategy should be implemented only at Demand and cannot be implemented at Supply Thus by using simple mathematical signs we have made a complex understanding easy to follow where now a demand and supply trader knows and understand that which are the two strategies he can implement at a Demand Zone and which are the two strategies that can be implemented at a Supply Zone Based on these calculations, we can determine the appropriate options strategies for different price levels: • Demand Zone: Buy Call or Sell Put • Supply Zone: Buy Put or Sell Call I hope you found the previous explanation clear. Now that you understand how to connect demand and supply with options, let's discuss how to determine whether to buy or sell options. Is the Demand and Supply strategy enough or are there other factors to consider?". We will talk about that in Part 2 of Unlocking Options Trading : The Power of Demand and Supply Strategy
NSE:BANKNIFTYEducation
by VishalSubandh
2
Basic Understanding about Supply and Demand ZonesQ: What is a supply zone in trading? A: A Supply Zone is a Price level or Area on a chart where Selling pressure is expected to be strong enough to overcome buying pressure, causing prices to fall. It is typically identified by a concentration of previous price highs where sellers have historically emerged. Q: What is a Demand zone in Trading? A: A Demand zone is a Price Level or area on a chart where Buying pressure is expected to be strong enough to overcome selling pressure, causing prices to rise. It is usually identified by a concentration of previous price lows where buyers have historically stepped in. Q: How can traders identify supply and demand zones on a chart? A: Traders can identify Supply and Demand zones by looking for Areas where the price has previously made significant moves up or down. For Supply zones, they look for price peaks followed by sharp declines. For Demand zones, they look for price troughs followed by sharp increases. These zones are often marked by areas of consolidation or strong price rejection. Q: How do Supply and Demand Zones integrate with other Technical Analysis tools? A: Supply and Demand Zones can be used in conjunction with other Technical Analysis tools such as Trend lines, Moving Averages, and Candlestick Patterns. For example, a Supply zone that aligns with a Resistance level can provide a stronger signal for potential price reversals. Combining multiple tools can enhance the accuracy of trading decisions. Q: How can traders Manage Risk when trading Supply and Demand zones? A: Traders can manage risk by using stop-loss orders just outside the supply or demand zone to limit potential losses. They should also consider the size of the zone and the volatility of the scrips when determining their position size. Regularly reviewing and adjusting their zones based on market conditions can also help in managing risk effectively. Keep Practicing & Learning Price Ac tion concepts
NSE:NIFTY1!Education
by Himanu_HATradeTalk1
breakout trading !In technical analysis, a breakout refers to a substantial price movement of a financial instrument, such as a stock or commodity, surpassing a specific level of support or resistance. This occurrence is of paramount importance, as it frequently signifies the initiation of a new trend, offering traders and investors valuable insights for informed decision-making. Outlined below are key aspects related to breakouts in technical analysis: Definition: A breakout occurs when the price of an asset surpasses a well-defined level of support or resistance. The breakout can manifest as either an upward movement (bullish breakout) or a downward movement (bearish breakout). Significance: Breakouts carry significance as they indicate a shift in market sentiment, suggesting that the prevailing trend may be weakening or reversing, potentially giving rise to a new trend. Types of Breakouts: Bullish Breakout: This occurs when the price surpasses a resistance level, signaling potential upward momentum. Bearish Breakout: In contrast, a bearish breakout happens when the price drops below a support level, indicating potential downward momentum. Volume Confirmation: Successful breakouts are often accompanied by an uptick in trading volume, serving as confirmation of the robustness of the new trend. Volume analysis is instrumental in validating the legitimacy of the breakout. False Breakouts: It is important to note that not all breakouts lead to sustained trends. False breakouts can occur, wherein the price briefly breaches a support or resistance level but subsequently reverses. Traders commonly employ additional technical indicators or await confirmation before acting on a breakout. Measuring Target: Traders frequently use the height of the pattern preceding the breakout, such as a triangle or rectangle, to estimate the potential price target. This aids in setting profit targets. Common Chart Patterns Leading to Breakouts: Triangles: Symmetrical, ascending, or descending triangles often precede breakouts. Head and Shoulders: Both inverse and regular head and shoulders patterns can signal potential breakouts. Rectangles and Flags: Consolidation patterns like rectangles and flags can lead to breakouts. Role of Trendlines: Trendlines are commonly employed to identify potential breakout points. The intersection of a trendline with a support or resistance level is deemed a critical zone for a potential breakout. Risk Management: Traders typically incorporate risk management strategies, such as setting stop-loss orders, to safeguard against false breakouts or adverse market movements. In summary, breakouts in technical analysis are pivotal events offering valuable information to traders and investors about potential shifts in market trends. Effective breakout trading strategies involve confirmation, volume analysis, and meticulous consideration of various chart patterns.
NSE:MPHASISEducation
by pratik2358
2
Supply & Demand Part 1We will talk about ranges, Premium & Discount levels and trading them. I'm going to explain the basics of Supply & Demand simply. This is Part 1 of a 2-part series. We’re going to cover the concept of buying high & selling low, ranges, Premium & Discount zones and taking entries & exits based on what we learned. Buying high & selling low Before we get into the topics, let's quickly understand the concept of buying high and selling low. We'll be using this concept throughout this idea. Why is it good to buy low and sell high? Let's imagine that we're trying to buy & sell a pair of shoes. If you buy at the 0.25 level and price goes up to 0.75, you make a profit. But if you bought at 0.5 and price goes up to 0.75, you would make less profit. If you buy at 0.25 and price goes down to 0, you make a loss. But if you buy at 0.5, you make much more of a loss. In the examples above, we can see that buying low is beneficial because it reduces how much money we lose and at the same time increases how much we can earn. The same logic can be applied to a sell. If we sell high at 0.75, we have less money to lose if price goes to 1 AND at the same time, we have more money to gain if price goes down to 0.25. But if we sell at 0.5, we have more money to lose (if price goes up to 1) and less money to gain (if price goes down to 0.25) The point is that it’s best to sell high and buy low. Range Let’s talk about what a range is. A range is the area between the latest swing high and swing low. A new range is formed when structure is broken and confirmed. Let’s look at how structure is broken. (a bearish structure break) We have our swing high and swing low to the left of the chart. This is currently our range. Then, price pulls back up and closes below the swing low (it breaks structure to the downside). A structure break only happens when a candle’s close is below the last swing low. Always check this on the previous candle and not on the current realtime bar which is forming. The current realtime bar will repaint and we won’t be sure if the close of the candle will actually remain below the last swing low (until the candle has finished forming). Now that our break of structure happened, we have to confirm the new low which just formed. We confirm this low by waiting for price to come up again and close (and not just form a wick) inside the range we had. Now, we know that our new low is confirmed. Once our new low has been confirmed, we can draw our new range. The new range’s top will be the highest high (i.e. the high which caused that confirmed low). The new range’s bottom will be the confirmed low. Let’s look at how a bullish structure break is formed. We have our range to the left of the chart. then, price comes down and then closes above the range. Now, we have an unconfirmed high. To confirm this high, we wait for price to close back inside the range. Once that’s done, we have our new range. Premium & Discount zones To understand Premium and Discount zones, let’s use a fib. The fib is divided into 4 zones: 0%, 25%, 75%, 100% A premium zone is the upper 25% (75% - 100%) of the fib and a discount zone is the bottom 25% (25% - 0%) of the fib. The other area in the middle (25% - 75%) is fair pricing. Aim to buy when price reaches the Discount zone (buy low) and sell when price reaches the Premium zone (sell high). Combining ranges with zones Let’s look at a way we can use what we learned to take entries and exits. For a buy: look for a bullish structure break. Then wait for price to close inside the range (to confirm the bullish structure break). Now, we have a new range. Draw a fib on the new range. Wait for price to reach the Discount zone of that fib. A candle low should be within the discount zone. You can buy there. Exit when price reaches the bottom/top part of the premium zone. If price fails to go down to the Discount zone to give us an entry and instead reaches the Premium zone and goes even higher above the new range, that means that a new range formed and we have to wait for this new range to be confirmed. This new range’s top will be the high that was broken, and the bottom will be the low that caused the move up which broke the high. Wait for price to close inside this new range for it to be confirmed. Then we have to wait for our buy signal again. For a sell: look for a bearish structure break. Then wait for price to close inside the range (to confirm the bullish structure break. That is our new range. Draw a fib on the new range and wait for a candle high to reach within the Premium zone. Sell there. Exit when price reaches the bottom/top part of the Discount zone. If price fails to go up to the Premium zone to give us an entry and instead reaches the Discount zone and goes even lower below the new range, that means that a new range formed and we have to wait for this new range to be confirmed. Our new range’s bottom will be the low that was broken, and the top will be the high that caused the move that broke the low. Wait for price to close inside this new range for it to be confirmed. Then we have to wait for our sell signal again. I hope you find this useful!
Education
by SamaaraDas
Mastering Trade Setup with simplicity of dow theorySimplifying Trade Strategies with Dow Theory Wisdom Welcome to the world of trading, where the Dow Theory can be your trusty guide. Let's break down an easy trade strategy that suits different market situations. Dow Theory Insights Dow Theory, a key tool in technical analysis, says understanding trends is crucial. Figuring out the trend is where we start, setting the stage for smart trade decisions. Bullish View If we're feeling positive Higher Lows: Check if prices keep going up. Near Support: Make sure prices are close to a support zone. Reversal Signs: Look for any candle patterns signaling a turnaround. Buying Setup: Stoploss: Think of it like a safety net, set it at the recent lowest point. Execute a buy trade when these factors line up, always keeping an eye on that stoploss. Bearish View If we're feeling negative Lower Highs: Check if prices keep going down. Near Resistance: Make sure prices are close to a resistance zone. Reversal Hints: Look for any candle patterns signaling a potential shift. Selling Setup: Stoploss: Your safety measure, set it at the recent highest point. Execute a sell trade when these conditions come together, always mindful of that stoploss. Sideways View For a market that's just hanging out Draw Lines: Sketch lines above and below the current prices (Support and Resistence Trendlines) Be Patient: Hang tight until prices break above or below those lines. Only jump into a trade when the market decides where it's going. In the lively world of trading, Dow Theory keeps us wise. By using these strategies, along with clever stoploss placements, you can navigate the markets with ease This post is for educational purposes only. Trading involves risk, and past performance is not indicative of future results. Always do your research and consider consulting a financial advisor before making any investment decisions. I am not sebi registered analyst. My studies are for educational purpose only. Please Consult your financial advisor before trading or investing. I am not responsible for any kinds of your profits and your losses. Most investors treat trading as a hobby because they have a full-time job doing something else. However, If you treat trading like a business, it will pay you like a business. If you treat like a hobby, hobbies don't pay, they cost you...! Hope this post is helpful to community Thanks RK💕 Disclaimer and Risk Warning. The analysis and discussion provided on in.tradingview.com is intended for educational purposes only and should not be relied upon for trading decisions. RK_Charts is not an investment adviser and the information provided here should not be taken as professional investment advice. Before buying or selling any investments, securities, or precious metals, it is recommended that you conduct your own due diligence. RK_Charts does not share in your profits and will not take responsibility for any losses you may incur. So Please Consult your financial advisor before trading or investing.
Editors' picks
NSE:NIFTYEducation
by RK_Chaarts
25
What is Price Action ? Beginners Guide in Easy Steps NSE:NIFTY What is Price Action Really? When I started learning I was using a lot of indicators and crap but then I heard about Price action, its meaning is pretty vague and confusing after a lot of effort I get to know that the simplest things work best. Let's see a structured way to approach Price Action analysis. 1. Chart Reading Bar by Bar. Studying the Previous candle reflects a lot of important information on the market movement and future direction. 2. Reading the Context and the whole Structure. *The circles marked on the chart show the best location where certain candlestick formation offers good trading opportunities. *The reading chart in the overall structure helps to eliminate taking trades in the direction of exhausted trends. 3. Identifying Momentum Increase or decrease. 4. Adding Volume Confirmations. Volume is the better half of price and without volume analysis can be incomplete. These are some of the factors that start the price action analysis. By practice, one can look into the deeper significance of these factors and use them easily. I hope this has added some new value to your knowledge, if you like these educational ideas, Share your views and like. Will Upload the Next Part with more factors. Keep Learning, Happy Trading.
Editors' picks
NSE:NIFTYEducation
by SANJAYPATIDAR_
18
Mastering Demand Zones : A Deep-Dive !! Mastering Demand Zones: Advanced Techniques in Stock Market Analysis Introduction to Demand Zones: In the realm of technical analysis, demand zones play a crucial role in assessing price movement and making informed trading decisions. A demand zone, also known as a support zone, is a price range on a chart where a particular asset, such as a stock, has historically experienced buying interest and a halt or reversal in its declining price trend. Demand zones are essential tools for traders and investors as they provide valuable insights into potential price levels where buyers are likely to enter the market, thereby preventing the price from falling further. By recognizing demand zones and understanding their significance, traders can make more informed decisions, manage risk effectively, and capitalize on potential trading opportunities. However, it's important to remember that technical analysis is not foolproof, and market conditions can change rapidly, so using demand zones in conjunction with other analysis tools is advisable. Defination: (What is Demand Zone) In the stock market, a "demand zone" refers to a specific price range on a price chart where there is a higher likelihood of increased buying activity or demand for a particular stock or asset. It's a concept often used in technical analysis to identify potential areas of support where prices might reverse or bounce higher. Here's a simple explanation: Imagine a stock's price chart, and you notice that within a certain price range, the stock has consistently found buyers and reversed its downward movement. This range, where buying interest is strong enough to halt or reverse a decline, is referred to as a demand zone. It's a level where traders believe the stock is attractively priced, leading to increased buying pressure. A demand zone typically forms because traders remember that the stock performed well in that price range in the past, making them more likely to buy if the price revisits that level. Traders often use demand zones as potential entry points for buying a stock because they anticipate that prices could rise from that area due to increased demand. It's important to note that demand zones are not foolproof predictors of price movements. They are just one tool in the arsenal of technical analysis that traders use to make informed decisions. The effectiveness of demand zones depends on various factors, including market conditions, overall trend, and the strength of buying interest. Overall, understanding demand zones can help traders identify potential support levels where buying activity might increase, but it's essential to consider other technical indicators and market factors for a comprehensive trading strategy. ---   Chapter 1: Fundamentals of Demand Zones In the vast landscape of the stock market, demand zones represent not only a point of intersection between price movements and investor psychology but also a nexus of potential trading opportunities. To comprehend demand zones is to unravel the intricate interplay of market dynamics and human behavior, a synthesis that lies at the heart of successful technical analysis. Central to understanding demand zones is recognizing the core economic principle of supply and demand. When a stock undergoes a price retracement during a downtrend, buyers perceive the lower prices as an invitation to participate. As buyers enter the market, their collective demand counters the existing selling pressure, creating an equilibrium and, consequently, a demand zone. This zone marks an area on the price chart where bullish sentiment prevails and offers an optimal juncture for traders to intervene. The historical evolution of demand zones is a journey that traverses time, reflecting the evolution of market psychology and trading practices. From the rudimentary interpretations of supply and demand in ancient markets to the sophisticated analysis enabled by modern technology, the concept of demand zones has evolved into a multifaceted tool in the arsenal of the astute trader. This chapter paves the way for an in-depth exploration of advanced technical analysis through the lens of demand zones lets take an example now, For Example; In the bustling realm of the Indian stock market, consider "ABC Ltd," a prominent company that has been experiencing a downtrend in its stock price. As the stock retraces and heads toward a crucial level of ₹1,500, a demand zone materializes. This zone represents a psychological and strategic juncture where buying interest has historically surged. The fundamentals of "ABC Ltd" remain strong, including positive earnings reports and market sentiment regarding the company's future prospects. The demand zone around ₹1,500 becomes a focal point as traders and investors anticipate a reversal in the downtrend. This illustrates the fundamental principle that demand zones encapsulate the equilibrium between supply and demand, acting as pivot points for price reversals. ---   Chapter 2: Technical Tools for Identifying Demand Zones Embarking on the quest to identify demand zones requires a comprehensive arsenal of technical tools, each contributing a unique facet to the intricate mosaic of price movements. Among these tools, support and resistance levels emerge as bedrocks of price action analysis. Support levels, often synonymous with demand zones, represent historical points where price declines were halted and reversals were initiated. Conversely, resistance levels demarcate zones where price advances were stymied, underscoring their importance as potential areas of market reversal. The Fibonacci retracement is another pivotal tool that elevates demand zone identification to a refined art. Derived from the Fibonacci sequence, these retracement levels mark potential demand zones by assessing the relationship between a price retracement and significant ratios. Overlaying these ratios on the price chart unveils previously hidden levels that might serve as demand zones. Volume analysis steps into the spotlight as a complementary tool, painting the canvas of demand zones with intricate strokes. Analyzing the intensity of trading activity within demand zones provides a nuanced understanding of the commitment behind each price point. These tools, when woven together, form a comprehensive tapestry of demand zone analysis that goes beyond surface-level identification to discerning the potential strength and impact of each identified zone. Lets take an example now, For Example; Applying technical tools to the case of "ABC Ltd," we find that the stock has consistently found support around the ₹2,000 mark in the past. Utilizing Fibonacci retracement levels, we note that the 50% retracement level aligns closely with this support level. This confluence underscores the potential demand zone at ₹2,000 as a significant area where buying interest could surge. Adding volume analysis to the equation reveals that historically, increased trading volume has accompanied price bounces near ₹2,000, suggesting heightened market participation and potential accumulation. Combining these technical tools provides a comprehensive view of the demand zone's strength and potential impact on price movements. ---   Chapter 3: Characteristics of Strong Demand Zones Recognizing the chasm between mere price levels and robust demand zones is the hallmark of a seasoned trader. Strong demand zones boast an array of characteristics that set them apart and signify their potential significance in the broader market landscape. "Multiple touches" emerge as a defining trait of potent demand zones. These are zones where the price has rebounded multiple times, highlighting the consistency of buying interest. The cumulative effect of these touches validates the zone's status as a significant level, indicating that it holds sway over market participants. Volume amplifies the impact of demand zones, turning the spotlight onto the intensity of market conviction. Heightened trading volume within a demand zone infuses it with a surge of energy, underlining the collective sentiment that bolsters the buying interest within that zone. Moreover, the entwining of psychological price levels with demand zones enhances their magnetism. When a demand zone coincides with a round number or a historically significant high or low, it resonates with traders, inviting their attention and potentially catalyzing buying activity. This chapter equips us with the acumen to sift through the market landscape and identify not just any demand zone, but those endowed with the attributes of strength and reliability. lets take an example now, For Example; For "ABC Ltd," the ₹1,200 level emerges as a robust demand zone. Over time, the stock has repeatedly bounced off this level, creating a trail of multiple touches. Each touch signifies consistent buying interest, validating the psychological significance of the ₹1,200 demand zone. Additionally, substantial trading volume has consistently accompanied these price bounces, indicating a broad market consensus on the importance of this demand zone. Furthermore, the demand zone aligns with a historically significant low point for the stock, reinforcing its strength. These characteristics collectively amplify the potency of the ₹1,200 demand zone. ---   Chapter 4: Advanced Confirmation Techniques Identifying demand zones is only the beginning; validation through advanced confirmation techniques lends an additional layer of assurance and precision to trading decisions. Among the most potent tools in this arsenal are bullish candlestick patterns. These patterns visually encapsulate the sentiment shift within a demand zone, transforming bearish pressure into bullish momentum. The engulfing pattern, a classic candlestick formation, encapsulates this sentiment reversal by engulfing the previous candle's range. This dramatic change in price direction within a demand zone signifies a shift in market dynamics. Divergence analysis adds a dimension of complexity to confirmation techniques. By comparing price movement with an oscillator like the RSI, traders gain insights into market behavior dynamics. Positive divergence, characterized by the price moving downward while the oscillator trends upward, hints at an impending reversal of bearish sentiment. Mastery of these advanced confirmation techniques equips traders with an artful finesse to separate true demand zones from fleeting fluctuations, positioning them to navigate the market with heightened accuracy. lets take an example now, For Example; In the scenario of "ABC Ltd," let's assume the stock price has approached the ₹1,800 demand zone. A bullish engulfing candlestick pattern emerges within this zone, marking a powerful shift from bearish to bullish sentiment. This visual confirmation is an indication that buyers have overtaken sellers within the demand zone. Moreover, the Relative Strength Index (RSI) exhibits positive divergence during this time frame. As the stock price trends downward, the RSI moves in the opposite direction, signaling potential upward momentum. This dual confirmation through candlestick patterns and divergence analysis boosts the credibility of the ₹1,800 demand zone as a potential reversal point. ---   Chapter 5: Risk Management Strategies Within the realm of trading, where volatility and uncertainty reign, effective risk management assumes paramount importance. Demand zones, while offering alluring opportunities, also carry inherent risks. Navigating these intricacies necessitates a comprehensive approach that encompasses various risk management strategies. Central to this approach is the art of placing stop-loss orders. By situating these orders slightly below a demand zone, traders shield themselves from the specter of false breakouts. This strategic placement ensures that even if a demand zone fails to hold, potential losses are contained. Position sizing enters the equation as a cornerstone of risk management. Traders allocate capital in proportion to their risk tolerance and account size, preventing overexposure to a single trade. The principles of risk-to-reward ratios further contribute to a balanced approach, ensuring that the potential rewards of a trade are commensurate with its risks. In a realm where uncertainty looms, effective risk management strategies serve as the rudder that steers the trader's ship, guiding them through the ebb and flow of the market's tides. lets take an example now, For Example; Suppose you decide to trade "ABC Ltd" with the demand zone at ₹2,500 in mind. To manage risk effectively, you set a stop-loss order just below the demand zone, at ₹2,480. This buffer guards your trade against potential false breakouts and limits potential losses. Position sizing comes into play as well. You allocate a portion of your capital for this trade based on your risk tolerance and overall account size. This ensures that your exposure remains within acceptable limits and aligns with your overall portfolio strategy. By managing risk through these strategies, you protect your capital and minimize potential downsides. ---   Chapter 6: Demand Zones in Different Market Environments The dynamic nature of markets mirrors the shifting winds, prompting traders to adapt their strategies to different environments. Demand zones, as malleable indicators, respond in unique ways to various market conditions, underscoring their versatility. In a trending market, demand zones operate as veritable launchpads, propelling prices further in the direction of the trend. Here, demand zones transform into essential support levels that act as stepping stones for continued price movement. In contrast, the world of sideways markets presents a different challenge. Demand zones within a sideways range serve as both potential entry points and zones of caution. As prices oscillate within a confined range, demand zones offer traders the chance to participate in potential breakouts or capitalize on range-bound price action. Volatility ushers in a realm of both opportunity and danger. Demand zones become focal points of not only entry but also vigilance. In this environment, traders must remain nimble, ready to adapt their strategies in response to rapid market shifts. lets take an example now, For Example; Now consider "ABC Ltd" in various market environments. In a trending market, the ₹1,600 demand zone acts as a catalyst for trend continuation. As the stock retraces to this level, it offers an attractive entry point for traders looking to capitalize on the ongoing uptrend. During a sideways market phase, the ₹2,200 demand zone takes on a unique role. It acts as a pivot for price oscillations within the range, offering potential buy and sell opportunities. As the stock tests the upper or lower boundaries of the range, this demand zone could signal a potential breakout or reversal, highlighting its versatility. ---   Chapter 7: Incorporating Demand Zones into Your Trading Plan The culmination of demand zone mastery lies in the integration of this knowledge into a holistic trading plan. A comprehensive strategy that incorporates demand zones can serve as a compass, guiding traders through the tumultuous waters of the stock market. This chapter walks us through the process of crafting such a trading plan. Setting objectives is the first step, aligning trading goals with personal aspirations and risk tolerance. Establishing clear risk thresholds guards against unforeseen market shocks, ensuring that trading remains within predefined boundaries. The harmonious integration of demand zone analysis with other technical and fundamental tools is pivotal. This convergence results in a strategy that's not only robust but also adaptable, capable of navigating a range of market conditions. lets take an example now, For Example; Integrating demand zone analysis into your trading plan for "ABC Ltd," you set clear objectives. Your goal is to achieve a 1:2 risk-to-reward ratio for each trade. Considering the demand zone at ₹2,200, you set your stop-loss at ₹2,180 and identify a profit target at ₹2,260. This alignment between demand zone analysis, risk management, and profit-taking strategy ensures a comprehensive and calculated approach to trading. ---   Chapter 8: Case Study and Practical Example The true litmus test of knowledge lies in its application. This chapter dives headfirst into the practical realm by presenting a series of case studies that illuminate the effectiveness of demand zone analysis. Real-world scenarios—ranging from triumphant victories to humbling challenges—offer readers a firsthand glimpse into the art of demand zone trading. For example. Persistent Systems. In a recent case in the Indian stock market, "Persistent" encountered a demand zone around ₹4620-4760. The stock's price had been declining, but within this demand zone, a bullish pinbar candlestick pattern formed. This marked a shift in market sentiment, as buyers stepped in and overpowered sellers. Adding to the confirmation, the RSI displayed positive divergence, hinting at an imminent price reversal. Subsequently, "Persistent" rebounded from the demand zone, validating the power of demand zone analysis combined with advanced confirmation techniques in real-world scenarios. This case study unravels the dynamic interactions between demand zones and price movements, capturing the essence of trading in action. By observing the strategies employed and the outcomes achieved, we can gain an experiential understanding that transcends theoretical knowledge. Follow InvestYourAsset and boost your trading knowledge ! Please give it a like to motivate us if you appreciate the educational content.
NSE:PERSISTENTEducation
by InvestyourAsset
What is IMBALANCE in the MARKET ? How to TRADE ?What is IMBALANCE in the MARKET ? How to TRADE ? Imbalance also known as Price Inefficiency is a key factor in Stock market price action Trading. Look for any candle which has a full body and look for the part of the candle that isn't overlapped by the previous and next candles' wicks. This signifies an imbalance in the market because there were few transactions going on between buyers and sellers. How to Find? In order to find imbalances, it consists of 3 candles. In a Bullish Scenario, It is where there is a gap between the top wick of the first candle & the bottom wick of the third candle do not meet. Wise versa for Bearish scenario. How do you trade with imbalance? Investors can protect themselves against the volatile price changes that can arise from imbalances by using limit orders when placing trades, rather than market orders. As each trading day draws to a close, imbalances of orders can arise as investors race to lock in shares near the closing price. Untouched Imbalance level? When price moves in one direction without filling the imbalance, mostly it tends to come back and fill the gap. Until then price wont go up/down much. Basically It will act as a magnet for the price. So Always find the imbalance areas which is a strong Demand and Supply zone for good trades and predict the market.
NSE:NIFTYEducation
by ViVenTraders
What makes a Resistance Potential OneResistance and support are faces of a same coin the concept is same , if price reverses its direction after getting closer to a particular level or zone we call it resistance or support level or zone. When you start learning about it more you will find that it is the most basic approach to analyze a price action, then you mix it up with trend line which is again nothing but a tilted support and resistances, concept is same. Trading such levels & zone require an approach where you can benefit maximum from the upcoming move and the trade you take should have the potential to give you a good risk to reward ratio. If you see, resistance and support are everyday happenings , they occurs so much times that taking a bet on every setup will make our trading random ,so filtering those blurry , OK-ok, less potential setup is very very important . --------------------- Here I am giving you some of my observation over filtering such setups. First do not try to make support and resistance everywhere , try to avoid making inside a range , can only make such resistances and support if they form on a large time frame or over a long period. This will filter out your 40% setups. Second Let the support and resistance test 3 or more touches , when price behaves in an ideal way more than three times the level or zone become very crucial and price can tend to give you a big and sharp rally (see the direction still can be any side as it is not always breakdown it can also be a big reversal). Third See the overall trend and recent price pattern , better if the setup is in order to the overall trend, reversals should also be in sync with overall trend as in this USD/INR chart the overall trend is bullish & the pattern is a bullish flag which is again a bullish one. Fourth Volume formation when price reaches to a support or resistance if a spike in volume is there then you can say a big players is also betting on those levels or zones in big quantity (note : they betting in which direction you can't guess like that). You can take entry at breakout and make your stop loss at the support simple....
Education
by TRADEWITHFUN247
Trading journal 🥲 20 trades posted for you guys 4 of them got SL❌ hit without reaching TP 1✅. That's not the end of my trading 😅 ,no one is 100% accurate in any field. 80% win rate is satisfied for me to be a profitable trader as we can see some of them never touched SL and still keeps growing which is also a very good thing about this journey. Always trust your plans 👍 , Psychology tip:-Don't let FOMO interact your mind or trading plan. Sl tp entry always remain same..never change them once u have set. Just forget after getting into the trade..either hit tp or sl.. don't bring sl to more down and increase your losses or tp to more up to increase your risk of hitting it.
Education
by Akshay_Gour
lets understand support and resistance in detail support and resistance they play a truly crucial role in trading If you want to trade like a pro, there's something you should know: Support and resistance, they're the stars of the show! this can be understood from the below:- Support is like a floor, it holds prices up high, Resistance is a ceiling, prices can't seem to fly. When prices hit support, they tend to bounce back, And when they reach resistance, they often lose track. These levels are key, they're a trader's best friend, They help you to enter, exit, and defend. So pay attention to support and resistance, my friend, They'll help you make profits and trade till the end! volume confirmation along with breakouts are beautiful
NSE:ANURASEducation
by pratik2358
SMC 2 trades 7.5 RR and 3.75 RR1 trade buy : I was looking for an order block on the 1 hour timeframe, I found a buy position, I waited for choch or bos to do it, then I entered the trade, it happened as expected, then I waited for an order block in the demand itself on the 1 minute timeframe as seen in the picture. 2 trade sell: In basically the same principle, I found an order block on a 1-hour timeframe, I waited for bos or choch to do it, when the price returned to the demand, I looked for an order block on a 1-minute timeframe and entered the trade.
Education
by ElonMusk555
1
Proximal and Distal Line Plotting For Supply and Demand ZonesProximal and Distal lines are important components of any Supply and Demand zone. One needs to plot two horizontal lines to mark Supply and Demand Zones. To know How to draw these lines, you need to understand Supply and Demand Zone formations. Proximity means nearest to the current price, while distal means farthest from the current price. What is the need to draw Proximal and Distal lines on a zone? As a Supply and Demand trader, one needs to know which price point to enter and where to exit. The proximal line is used to define the entry point into a trade, and the Distal line defines the Stopping Point. We place our stop losses slightly beyond the distal lines of the zones. Have a look at the above image Supply zones are located above the current market price and Demand zones are located below the current market price. In the illustration above, CMP is Rs.1668.3 The green-shaded zone below CMP is the Demand zone. It has two horizontal lines one at Rs.1607.65 which is nearer to the current price, and it forms the proximal line, whereas the other horizontal line is at Rs.1588.75 which is far away as compared to Rs.1607.65, so it constitutes the distal line of the demand zone The pink-shaded zone above CMP is the Supply zone. It has two horizontal lines one at Rs.1688 which is nearer to the current price, and it forms the proximal line, whereas the other horizontal line is at Rs.1702.4 which is far away as compared to Rs.1688, so it constitutes the distal line of Supply zone. How to Draw Proximal and Distal Lines for a Demand Zone A Demand zone is a designated area on a chart where Demand exceeds Supply, and there is a high likelihood of having pending Institutional Buy Orders. We look to enter long trades when the price retraces back to the demand zone, in doing so we also participate along with the Institutions which increases the probability of the trade working in our favour. So it's important to correctly identify the Proximal line and Distal line of a Demand Zone. Let u see how to mark the Proximal and Distal line of a Demand Zone Proximal Line Marking For A Demand Zone Irrespective of whether it’s a DBR or RBR Demand zone, the proximal line marking method remains the same. There are multiple ways to mark proximal lines, I will discuss the one that I follow and is widely used. While marking the proximal line we look at only the Base Candles, Proximal line is plotted at the Highest Wick of the base candles. Distal Line Marking For A Demand Zone There is a slight variation while marking distal lines, depending upon whether it’s a DBR or RBR Demand Zone Distal Line For DBR Demand Zone We need to consider all three components, Leg In, Base Candles & Leg Out. The distal line is plotted at the lowest point of the entire formation. Distal Line For RBR Demand Zone We need to ignore the Leg In and focus only on the Base candles and the Leg Out. The distal line is plotted at the lowest point of either the Base candles or the Leg Out, whichever is lower. How to Draw Proximal and Distal Lines for a Supply Zone A Supply zone is a designated area on a chart where Supply exceeds Demand, and there is a high likelihood of having pending Institutional Sell Orders. We look to enter Short trades when the price retraces back to the supply zone, in doing so we also participate along with the Institutions which increases the probability of the trade working on our favour. So it's important to correctly identify the Proximal line and Distal line of a Supply Zone. Let u see how to mark the Proximal and Distal lines of a Supply Zone Proximal Line Marking For A Supply Zone Irrespective of whether it’s an RBD or DBD Supply zone, the proximal line marking method remains the same. There are multiple ways to mark proximal lines, I will discuss the one that I follow and is widely used. While marking the proximal line we look at only the Base Candles, Proximal line is plotted at the Lowest Wick of the base candles. Distal Line Marking For A Supply Zone There is a slight variation while marking distal lines, depending upon whether it’s an RBD or DBD Supply Zone Distal Line For RBD Supply Zone We need to consider all three components, Leg In, Base Candles & Leg Out. Distal line is plotted at the highest point of the entire formation. Distal Line For DBD Supply Zone We need to ignore the Leg In, focus only on the Base candles and the Leg Out. Distal line is plotted at the Highest point of either the Base candles or the Leg Out, whichever is Higher. Conclusion In conclusion, the Proximal and Distal lines are critical components of the Supply and Demand Trading Strategy. Knowing how to properly place them is essential for the correct identification of zones. Supply and Demand Zone formations when combined with other factors like Trend, Location, and Quality attributes of the zone form a very sound rule-based Price Action Trading Strategy.
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NSE:HDFCBANKEducation
by MAKTradingSchool
13
Rally Base Drop – Supply ZoneUnlike conventional Price Action Analysis, which relies on countless chart patterns, Supply Demand Strategy focuses only on four high-probability price formations. Rally Base Drop (RBD) is one of the four price formations which lay the foundation of the Supply Demand Trading Strategy. Rally Base Drop Pattern RBD is a reversal price pattern, which one can generally locate at market turning points. At areas where uptrends get exhausted and begin a new downward move. RBD occurs when prices have been rising, and peaking, followed by a sharp drop. This indicates that the sellers are now more aggressive and have overwhelmed the buyers to form a Supply Zone. Components of a Rally Base Drop Pattern This formation comprises three parts: 1. Leg-In Candle - Bullish Candle to the left-hand side of the base structure. It need not be an explosive candle. 2. Base Candles - Narrow range small-bodied candles which indicate that orders are potentially being accumulated by the institutions. 3. Leg-Out Candle – Huge Explosive Red candle with a sharp drop in price, which indicates the footprint of Institutional Selling activity. Steps to Identify a Rally Base Drop Pattern 1. Start with the Current Price on the Chart and go from Right to left 2. Look up and left until you find a strong Drop in the Price 3. Identify whether the formation is an RBD 4. Mark the Zone When marking the Zone, we need to watch for freshness and the strength of the Leg-Out Candle. Fresh Supply Zones are those where the price has never retraced after formation, they have the highest probability of having unfilled sell orders. Strong Explosive Red Leg-Out Candle indicates that supply and demand are totally out of balance and institutions have been aggressive sellers at that price zone. Trade Action at a Rally Base Drop Supply Zone RBD pattern is the footprint of Institutional selling activity, formed due to the sheer size of their sell orders. This implies that, when prices retrace back to the area, there is a strong likelihood that there will be a large number of pending sell orders. After identifying the supply zone, we as retail traders must wait for the price to retrace to the zone. The first retracement to the RBD supply zone is a high-probability sell opportunity. We can initiate a short trade on the pullback to the zone and in doing so participate along with the Institutions to the short side. Some past examples: Although RBD is a very powerful supply zone formation, it is highly recommended that one mustn’t trade it in isolation. Combining it with factors like a trend, trend exhaustion and location will improve the odds of the zones working in our favour.
NSE:POLYCABEducation
by MAKTradingSchool
Gap Trading Combined With Supply & Demand ZonesWhat Are Gaps? Gaps are nothing but Price of a Stock moving up and down sharply with no or little trading happening between the previous days close and current days open. Gaps show an ultimate picture of imbalance between supply & demand. Gap formations are due to many fundamental and technical reasons. Most common example, when there is an announcement of company earnings. Gap Up or Gap Down is imminent the next trading day due to positive or negative news. A trader can profit from gaps provided he/she can identify the type of gap and its location with perspective to Institutional Supply & Demand Zones. Gap Trading Strategy using Supply and Demand Zones A lot of traders are fearful of Gaps and see it as a threat & aren’t comfortable carrying positions overnight. However, for a professional Supply Demand Trader, these Gaps aren’t threats on the contrary they provide high probability trading opportunities, when combined with Supply & Demand Zones. Four Gap Structures That We Look At: 1. Inside Gaps 2. Outside gaps 3. Novice Gaps 4. Professional Gaps 1.How to Identify & Trade Inside Gaps? Inside gaps are created when Price Opens between the prior Day’s High and low. Often these gaps fill quickly on the same day. Inside gaps can be mainly used for quick intraday trades, provided they happen at strong supply & demand zones. Gap Up into a strong Supply Zone provides a good short opportunity, whereas Gap Down into a strong Demand Zone presents a good long opportunity. Let’s see an example: 2.How to Identify & Trade Outside Gaps? Outside gaps are created when Price opens beyond the Prior days High and low. These gaps generally do not fill on the same day. They indicate the establishment of a new Trend or the continuation of the existing one. One must wait for quality Supply & Demand Zones to form after the gap and wait for a pullback to join the new move. Let’s see an example: 3.How to Identify & Trade Novice Gaps? When price gaps in the same direction of the current trend, then it is called a Novice Gap. Novice gaps as the name suggests are created by novice trader emotions and are excellent opportunities to find high probability trade setups. Gap Up or Gap Down after extended moves into quality areas of Supply & Demand, offer us high probability Short & Long opportunities respectively. Let’s see an example: 4.How to Identify & Trade Professional Gaps? When price gaps up in the Opposite direction of the current trend, it is called a Professional Gap or a Pro gap. Pro gaps represent a significant imbalance between Supply & Demand. Pro Gaps generally occur after extended moves in one direction, taking the amateur traders completely by surprise. They generally bring about trend change. Pro Gap Down & Pro Gap Up form high probability Supply & Demand Zones. Pull back to these zones provide us with opportunities to enter at trend change points. Let us see with an example:
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NSE:CUBEducation
by MAKTradingSchool
16
Price Action Trading Using Supply & Demand ZonesSupply and Demand Trading Strategy is a price action strategy that focuses on identifying Institutional Buying & Selling Footprints on a Price Chart. This strategy doesn’t rely on any indicators or oscillators; entire focus is on Price Action. Owing to the sheer large size of their orders, Institutional buying or selling leaves behind certain footprints which create specific chart patterns. Price Action Trading Methodology relies on a vast number of Price Patterns, however Supply Demand Trading Methodology focuses only 4 Specific Price Formations. These are classified as Supply & Demand Zones. Supply & Demand Zones These zones are areas on a price chart where price in the past had spent very little time and had moved in an explosive manner. Such sharp moves in price is possible only because of Institutional buying or selling. Owing to the structure of these zones, there is a very high likelihood of having unfilled institutional orders in any zone. Demand Zone Formations Rally-Base-Rally (RBR) A Rally- Base- Rally is a price action pattern that represents the formation of a Demand Zone. It is generally found in strong uptrends, indicating a continuation of the uptrend. This type of pattern is characterized by a leg-in candle followed by a basing of candlesticks and then another Big Explosive leg-out candle. If you look at the leg out candle created in the chart below, it shows a strong vertical rally which is very likely due to institutional buying activity. Drop-Base-Rally (DBR) A Drop-Base-Rally is a formation that represents another Demand Zone pattern. It is a reversal formation, in which a drop is followed by a sideways price movement and then a strong bullish rally. The leg out candle ideally should be a big explosive move which will depict institutional buying activity. Supply Zone Formations Drop-Base-Drop (DBD) Drop-Base-Drop is a price action pattern that represents a Supply zone. A bearish drop followed by a basing or sideways price movement and then an explosive bearish continuation downwards. It is a continuation pattern which can be used to trade & participate in the down trend. Rally-Base-Drop (RBD) Rally-Base -Drop is a price action pattern that represents another supply zone. This formation is characterized by an upward move then a basing of candles and a strong explosive move downwards. Explosive drop after basing indicates the footprint of institutional selling activity. This formation is generally found at the end of an Uptrend signalling a reversal. Trade Action at Zones Supply & Demand trading methodology is a retracement strategy. Long trades can be initiated when price retraces to a Demand Zone & Short trades can be initiated when price retraces to a Supply Zone. However, all zone formations aren’t alike, one must qualify the zones based on factors like how Explosive was the move from the zone, how much time price spent in the zone & most importantly what Reward to Risk Ratios do they zones provide. These zone formations combined with Trend, Location & Multiple Time Frame Analysis lays down the ground rules for Supply Demand Trading.
NSE:ASHOKLEYEducation
by MAKTradingSchool
2
How to know that a double top or bottom will failHello Everyone as you can see here we have made two lines at the top and two lines at the bottom of the same height and you can see how it worked very well and told you very early that where it could be down and have to be cautious but it doesn't mean that everytime you find something like this you should be cautious at there and ready to exit and take the profit. Hope you get something new to learn if than pls like and follow us thanks bye.
NSE:PELEducation
by MAYANKTECHRESEARCHING
6