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

#11
More evidence of price action. Watch the continuation of upside move in Titan Nov futures after rejection of down move. Earlier chart, in previous post, shows how down move was rejected during pullback and how the prices come back very close to the demarcation level in the next session. Once the level was respected the trend continued and higher levels get attained in successive sessions. The below chart shows a combined move of three sessions together. Kindly note, no indicators, oscillators, patterns or volume are employed here.
1543380295245.png

Regards.
 
#12
Important developments and their impact on the markets.
1) Fed signalling a pause in interest rate hike cycle = Dollar weakens against most currencies.
2) Crude oil eases below 60 dollar per barrel.
3) RBI relaxes norms for NBFCs and agrees to inject liquidity in PSU banks.
4) FII data shows increased buying and fund allocation in NOV 2018.
5) Weak GDP figures released after market hours today might have a bearing on Monday morning but still Indian (emerging) economy remains the fastest in terms of growth.

The below chart of nifty futures EOD shows prices entering bull territory (10850 plus) which would indicate the resumption of bull run in Indian markets. Though its a breakout and it needs to be confirmed with pull back respecting the 10850 level it makes an interesting study.

If we ignore the above developments and concentrate just on the price behavior it gives a distinct signal of a significant shift in sentiment. How durable the move is will be tested and confirmed in the coming sessions. Is this the precursor of a more powerful rally or a bull trap in the making?

1543588738786.png


Regards.
 
#13
Dear Vinod,

How to determine if the pullback has indeed negated the breakdown and now will turn into uptrend?
More evidence of price action. Watch the continuation of upside move in Titan Nov futures after rejection of down move. Earlier chart, in previous post, shows how down move was rejected during pullback and how the prices come back very close to the demarcation level in the next session. Once the level was respected the trend continued and higher levels get attained in successive sessions. The below chart shows a combined move of three sessions together. Kindly note, no indicators, oscillators, patterns or volume are employed here.
View attachment 31120
Regards.
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#14
Dear Vinod,

How to determine if the pullback has indeed negated the breakdown and now will turn into uptrend?


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Dear Sanjoy,

The answer to your query lies in the chart itself along with the explanation I gave. If you see the chart, once the pullback takes the prices above 906, the subsequent bars have had not breached 906 again. As the day progressed, the prices moved higher. That was an indication that the bulls were back in control. Having said that I must emphasize that trading is about taking calculated risks at the right areas. In this case, reversal above 906 was your area of calculated risk. Another more safer strategy would be to enter the next session when the stock prices retraced again to check the demarcation area. The prices retreated northward after coming very close to 906 forming the days low. Here you are more assured as there is a double check of the levels by the market. One can then enter as the prices go higher. Hope this satisfies your query.

Reagrds.
 
#15
Some points of discipline to observe before any trader initiates a trade. Always measure a trade for the following criteria, and you will find that, you will end up taking a fewer but more fruitful trades : 1) Trend 2) Range 3) Entry 4) Exit 5) Stop loss.
1) Trend : Most trades, would not be initiated in the first place, as most novice traders are not sure about the trend.
2) Range : Baring the breakouts and breakdowns, the markets move in a range most of the time.
3) Entry : Most traders get sucked into a trade, after looking at sharp fluctuation of prices, which is a wrong practice. Entries need to be planned. ( Deliberate use of the words sucked and planned ).
4) Exit : Once entry has been made, the market decides the further course. Either the target is achieved or we get stopped out.
Even if the trade is in your favor, it is always better to come out a couple of points earlier than your expected target.
5) Stop loss : Stop loss is a discipline which protects your capital. I have heard ridiculous arguments form traders, saying that, "Stop loss always gets triggered."

Inculcate a habit to consider these points before initiating a trade and one can avoid most mishaps. Most mishaps, in the markets, develop into epics, simply because a stop loss is not employed.

Many people start as traders, then they are forced to become investors, and finally they become analysts.
 
#16
Dear Vinod,

Missing your inputs on PA.

Waiting to understand demarcation lines.


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#18
Sorry for the delay. Lets proceed with what I have gathered from the market. Lets take up the demarcation area. As I said earlier demarcation area is based on the premise that the market has a structure. Once we talk of structure, definitely boundaries will be involved. These boundaries are our demarcation areas and it is here where the price movement matters. How we arrive at a demarcation area will need a bit of understanding of candlestick study. Candlestick study means the form/structure of the candle and not the conventional studies such as doji, shooting star, hanging man etc. Now since Pradeep Narayan has brought up Tatasteel lets take up Tatasteel futures EOD chart to understand this concept. Kindly have a look at the EOD chart of Tatasteel futures below and the explanation that follows it.

1544344653351.png

In the above chart I have selected 540 as an important area. I have used the word area instead of point as the market is dynamic and it does not behave in absolutes to the last dot. There will be minor variations. One can also see reference lines at specific intervals. These intervals are stock specific and hence we have steady movers as well as high beta stocks. In the case of Tatasteel futures it works out to 4%. The rectangles marked out in different colors mark out the boundaries. Once prices shift from one area ( rectangle ) to another you can see prices operating within that area for most part. On certain days prices do breach these boundaries but by day end they are pushed back within these areas. The last rectangle in red color shows how the prices jumped to high of 551 levels when US-China announced a moratorium of 90 days on the trade war. However, at the session end we find the market maker has pushed the prices lower to keeping it below 540 levels. This also shows that the down trend in Tatasteel remains intact. What we see in the EOD chart, is repeated intraday as well, within different time frames. One needs to observe and be patient and the movement shall reveal itself to you over a period. How we apply this EOD study to take intraday positions is a study we shall take up in subsequent posts.

Regards.
 
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#19
Continuing with Tatasteel futures I had already mentioned in my previous post that the downward trend was still intact. As per calculations based on EOD chart levels, the next target comes near 497 plus. Today's opening rate in Tatasteel futures was 598.55 which is very close to the calculated rates. Its still early and as the session progresses we may or may not see the exact prices. The important thing to notice is how prices come very close to the calculated levels and hence we can safely conclude that this is another evidence of the way Tatasteel behaves.

Regards.
 
#20
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.

View attachment 30991
sir reference line create as intraday basis or derive from previous few days history or from option data
 

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