Now I am going to prove something which can be easily learn't by all newbies.
Here we just need 20SMA, Stoch. Thats it. Nothing else.You can just do successfull trading with just these 2 and as usual you should know the basic of candlesticks. No excuse in that regard.
What I am going to do is simple. when price moves up
1.I ask where the next resistance is?
2.Then look for a single candlestick pattern like Shooting star,hanging man,gravestone doji etc.
3. When that candle arrives ask where the stoch is. Its in overbought - short.
Viceversa when price is dropping.
Lets take chart and you will get more clarity on this.
Today's tisco chart.5 Minutes.
Commenting numberwise.
Immediately after first 5 Minute bar we have a Shooting star.2nd bar of the day.wait for a close below that shooting star.It didnt.
1. High wave candle. wait for a close below that High wave candle. Ask where the stcoch is .In overbought.Short.Ask where the next resistance is. We don't know.Wait till we get one.
2.Hammer with volume. Ask where the Stoch is. OS. long above the top of hammer.ask where the next resistance is .Its at the 50% of that big red bar .i.e:7th bar of the day.
IMPORTANT:In a trend whenever you see a wide range bar remember this .The 50% of area of recent WRB acts either as res or support depending on the trend.
3.Am I true ?at 20ema price gets rejected as well as its 50-60% of that big red bar. small shooting star.Ask where the stoch is .OB.Short below the close of Shooting star.Ask where the next res is. Its point number 2 at the hammer.
4.Am I true? One more hammer. ask where the stoch........ OS.Go long above top of hammer. Ask where next res is.Remember it took support for the 2nd time. Now the next res to 50% area is 100% area of that WRB.I.E:TOP OF THAT BIG RED CANDLE.
5. Am I true? Bearish Engulfing .Ask where the stoch is.stoch stayed in OB>5 Bars. remember the rule and keep quiet because bulls are still in lead. now ask where next supp is. 20ema? lets wait.
6.Yes. at 20ema gravestone doji followed by a big green candle .Ask where the stoch is. turning upside from the dip. Go long .Now ask where the next res is .After 50% and 100% its Certainly high of the day. Lets wait.
7.Yes. Big shooting star with huge volume. Ask where the stoch is.Now we realise that there is _ve divergence which indicates we are for big down move.and you short the break of bottom of shooting star and walk to your bank with a smile by eod.
Just ask these little questions and you will do wonders in trading.Its a flip flop day and this simple method works.And market remains in these situations for 85% of the times.Then On huge trending day you do not require any system at all !!!!!:lol:
Regards
Raghav