PRICE ACTION : No indicators, patterns and theories. Just price.

#1
Hi Friends. I have been around for some time now. Have been a student of the market for a long time and continue to be so. Initially I tried many things from tips, sourcing information, studying TA (never had the patience and temperament to study TA, besides too many variables made it less appealing). I was in search of something which was simple, something which was happening on the charts but was escaping attention. I was searching for something which would be applicable across all segments of the financial markets. I always heard that price was everything and eventually everything gets priced in. I started concentrating on price and the way price behaved. I finally arrived at certain conclusions which satisfied my criteria for a system to understand price movement. Its my inference of price action and I believe its a very effective way of studying the financial markets. I will share simple charts without indicators or oscillators, which explain price behavior. Along with the charts I shall post some articles from my blog which I feel can guide new and upcoming fellow traders. Presently I teach price action and wish to share my ideas with you people. Kindly let me know about your views. I welcome all constructive inputs and criticisms.

Sharing below last session's (22-11-12018) intra-day chart of BankNifty futures (15 mins time frame). The Reference line (26165 on BankNifty) in red colour is an important feature which demarcates the areas where you take action. Besides the demarcating line there are absolutely no indicators, oscillators or patterns. Here one can clearly appreciate that around 1:15 pm BankNifty had a breakdown below 26165. In the next 3 bars the price action is limited to the area below 26165. At the fourth bar we see an attempt to regain 26165 and by the time the bar closes we see the attempt failing. This is a clear indication that the prices are ready to move south wards now. In the subsequent bars we can see the prices go down rapidly to see a fall of almost 200 points. This is price action.

BANKNIFTY 15 MIN 22-11-2018.png
 
#2
Good thread. Keep 'em coming.

Why 26165 was the demarcation line?

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#3
Dear Sanjoy,

The 26165 demarcation line is a function of the market. The markets are dynamic, and based on numerous factors they undergo price adjustments, so that ultimately everything gets price in. It is in this process of price adjustments, the market shifts higher or lower. Most of us will agree that the market has a structure. Once we talk of structures, boundaries come into play. These boundaries are the demarcation areas which provide us with opportunities to take calculated risks. In the case of BankNifty it happens to be 26165 and once it was breached successfully the market followed suit.

Let me explain it with an earlier event, which I have explained in my blog.

PRICE ACTION IN BANK NIFTY (15-11-2018) & (16-11-2018).

As important developments come through, the market adjusts the prices accordingly. Two important developments were of 1) RBI agreeing to inject INR 12000 cr into PSU banks via purchase of Govt securities and 2) The RBI governor having met the Finance minister and PM signaled a shift in stance form conflict to accommodation. Having sensed this the bank nifty index futures shifted its base higher on the day of its weekly options expiry (15-11-2018). The following day (16-11-2018) market witnessed an up move with support coming in at levels near 26160-65. Besides all leading PSU banks joined the party in shoring up the index. In the coming days this level of 26160-65 would be very important, more so after what transpires at the RBI board meeting on 19-11-2018. Even if the Government were to invoke section 7 of the RBI act it would translate into more liquidity for the market in the short term at least. What the RBI governor does in response would have far more implicating effects.




Now if we follow up this with the last session. (22-11-2018). Kindly note none of the charts posted show volume data, the focus is only price.

PRICE ACTION BANK NIFTY (22-11-2018).
After the RBI meet fiasco, the bank nifty index finally retreated from the newly formed higher base at 26165. The expected relief for NBFCs did not materialize and finally the markets caved in on bank nifty weekly options expiry day. This happened when crude has already witnessed a big fall and rupee has recovered from 73 odd levels to the dollar. One more important thing I noticed was that the BankNifty futures shifted to a higher base on the previous weekly options expiry day on expectations of positive news from the RBI meet. This also meant a lot of positions were created for the week and the Index was kept afloat for the whole week as the positions in options were adjusted. Finally, on the day of weekly options expiry the bulls surrendered.

The chart below explains it all.



Hope this answers your query.
Regards.
 
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#4
Even if one is unaware of all the events in the world markets, one can study price action and be aware of the levels where the markets are likely to change trend or behavior. Price action is applicable across different time frames and can be used effectively to understand the price behavior of a security. It is very effective in the study of reversals or rejections and continuation as well.
Below is the example of TITAN FUTURES intra-day move today.

1543225362201.png


Titan after rejection of breakdown goes to day high levels again.

1543225899636.png


Whereas a good example of continuation is TATASTEEL FUTURES.
Below is a continuation of downtrend in TATASTEEL 60 MIN CHART (14-11-2018 TO 26-11-2018).


1543226505745.png


Another example of EOD reversal is BankNifty futures.
BankNifty as I had mentioned in my first post 26165 was a key level which the market gave up in last session. Today it was respected in the first half but later on as the private banks gathered steam it was taken out and BankNifty moved back to higher territory.

1543227392223.png


Regards.
 
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#5
Thank you.

Why was the reference line(price) there and not somewhere else?
Even if one is unaware of all the events in the world markets, one can study price action and be aware of the levels where the markets are likely to change trend or behavior. Price action is applicable across different time frames and can be used effectively to understand the price behavior of a security. It is very effective in the study of reversals or rejections and continuation as well.
Below is the example of TITAN FUTURES intra-day move today.

View attachment 31063

Titan after rejection of breakdown goes to day high levels again.

View attachment 31064
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#6
Thank you.

Why was the reference line(price) there and not somewhere else?

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Dear Sanjoy,

As I pointed out earlier, the markets change their behavior decisively at these levels and hence they are our demarcation areas. I have already given a hint in my earlier post, that markets have structures and structures have boundaries. I will come to it in future posts.

Regards.
 
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#7
Dear Vinod,

I was trying to read the way you are reading the market.

Wanted to pick your mind, your thought process. Hope I have not been rude.

Thank you.
Dear Sanjoy,

As I pointed out earlier, the markets change their behavior decisively at these levels and hence they are our demarcation areas. I have already given a hint in my earlier post, that markets have structures and structures have boundaries. I will come to it in future posts.

Regards.
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prabhsingh

Well-Known Member
#8
Not clear on demarcation areas and why you choose these areas.There is something behind which needs to be disclosed i.e either its Support/Resistance or something else.
 
#9
Dear Vinod,

I was trying to read the way you are reading the market.

Wanted to pick your mind, your thought process. Hope I have not been rude.

Thank you.

Sent from my ONE A2003 using Tapatalk
Dear Vinod,

I was trying to read the way you are reading the market.

Wanted to pick your mind, your thought process. Hope I have not been rude.

Thank you.

Sent from my ONE A2003 using Tapatalk

Dear Sanjoy,

I am happy that you are keen to understand what I am presenting here. You have not been rude in any way so please let go of any such thoughts. We all are students here. As I mentioned I will be coming to the demarcation area gradually. Just keep in mind that market has a structure and structure has boundaries.

Regards,
 
#10
Not clear on demarcation areas and why you choose these areas.There is something behind which needs to be disclosed i.e either its Support/Resistance or something else.
Hi,

Kindly be patient as we go ahead. I just need to demonstrate that there are indeed areas in the market where the behavior changes. Regarding the demarcation areas, I will ask you to look at my earlier posts.

Regards.
 

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