Food for Thought

Niranjanam

Well-Known Member
#1


Look at the above picture. You might have seen this pattern many times.

Market is in a bull trend. It pull backs and makes a low at point A. Afterwards it goes up and later returns to the same price level and print a beautiful pin bar.

As a trader what will be your action in this area?

Some possibilities are
1.You will keep a stop loss order just below point A if you are holding long position
2.You will sell just below point A expecting a breakout to the down side
3.You will go long above the pin bar with a stop loss below the candle

Will you buy at the circled area? Who bought there? Who absorbed both stop loss selling and breakout selling? Why?
 

ashwani chadha

Well-Known Member
#2


Look at the above picture. You might have seen this pattern many times.

Market is in a bull trend. It pull backs and makes a low at point A. Afterwards it goes up and later returns to the same price level and print a beautiful pin bar.

As a trader what will be your action in this area?

Some possibilities are
1.You will keep a stop loss order just below point A if you are holding long position
2.You will sell just below point A expecting a breakout to the down side
3.You will go long above the pin bar with a stop loss below the candle

(((Will you buy at the circled area? Who bought there? Who absorbed both stop loss selling and breakout selling? Why?)))
it is a very valid question raised
 
#3


Look at the above picture. You might have seen this pattern many times.

Market is in a bull trend. It pull backs and makes a low at point A. Afterwards it goes up and later returns to the same price level and print a beautiful pin bar.

As a trader what will be your action in this area?

Some possibilities are
1.You will keep a stop loss order just below point A if you are holding long position
2.You will sell just below point A expecting a breakout to the down side
3.You will go long above the pin bar with a stop loss below the candle

Will you buy at the circled area? Who bought there? Who absorbed both stop loss selling and breakout selling? Why?

Heavy volume coming in at the pinbar indicates smart money coming in/ or already existing orders. This drives the prices up.
 

Niranjanam

Well-Known Member
#5
valid question is why ,they have taken decision to start buying from ,where the wick has started
You are spot on, Ashwani.

Usual answer is that "Smart money is buying " But Why ?
So far I have not seen any system or traders recommending to buy at the marked area. But somebody is buying . Who ? What is their game plan ?

Of course you can draw many MA, EMA, Fibs, Trend lines. Gann lines, some wave counts etc and put the blame on them. But that is only an excuse

Angels rush in where Fools fear to tread.
 

ashwani chadha

Well-Known Member
#6
you are spot on, ashwani.

Usual answer is that "smart money is buying " but why ?
So far i have not seen any system or traders recommending to buy at the marked area. But somebody is buying . Who ? What is their game plan ?

Of course you can draw many ma, ema, fibs, trend lines. Gann lines, some wave counts etc and put the blame on them. But that is only an excuse

angels rush in where fools fear to tread.
yes ,my 100% vote is with you,that is what i was also saying.what is the solid support behind their buying ,from start of the wick
 
#7
yes ,my 100% vote is with you,that is what i was also saying.what is the solid support behind their buying ,from start of the wick
Smart money is coming in because..of the same reason you or i trade, to make profits.

This is how most trends work. The counter trend you see is nothing but absorbing the Supply/Demand , only to push the prices higher or lower..
 

mastermind007

Well-Known Member
#10
Nice question!
.... and i know the phenomenon that is called 'SL hunting'.
This is a regular phenomenon in Crude Oil and i trade it comfortably.
My understanding of this concept is based on a statement by Richard Donchian.
And the statement from the Richard Donchian is?
 

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