Trading the trend

[VIKAS 21]

Pl tell me whether the retest and failure shd be the same day or shd we wait -. Wait how long. Pl pardon my ignorance.

It is not necessary that retest and failure happen on same day....

In case of uptrend
1. We know that a stock in an uptrend makes HH and HLs. When it fails to do this, it shows that the trend is in question. This stock has now tested that prior high - and failed. So, this stock is no longer making HH. But, it is not making LL either!

So far, there is no confirmation that the trend has changed.

2. This stock has now fallen below the nearest HL. We now have confirmation that the trend has changed. This stock is now making lower highs and lower lows. And that is the definition of a downtrend!.

 

[gurmy.]

Dear Gurmy ...

plss post some nice posts on support/resistance levels here...

as i know you are master on this subject....

waiting for ur posts eagerly...

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support and resistence are very easy to detect on a chart and very effective to trade if combined with price action around around these lines

many people make mistake to trade as soon as price break a support/resistence

but breaking a support/resistence only alerts a trader to be prepare for the opportunity to take trade,as and when it appears

most of the times when a support or resistence broken,price comes back to retest support/resistence,and that is the time to take decision with a confirmation of price action

hope, am not disturbing the flow of thread

thanks

 

[prabhsingh]

Vikas,

Kindly can you also touch base as how to identify false high/low breakouts happening once price breaks key support/resistance levels or Pivot levels.There are times when price breaks a significant high and traders will rush to buy but price turns quickly back and never comes up letting stop loss trigerred.

For e.g LT seems to be coming at very strong support levels of 1305-1310.Now this stock is already making LH and LL levels which means trend is down but contrary to that fundamentally this stock is very strong and seems to have fallen much more than required.

Hence can we expect turnaround in this stock in coming days.What needs to be watched in order to ensure support is holding strongl?.Is it movement happening sideways around 1305/1310 levels or anything else?Also,I think if we choose LIVE stocks than it would be helpful for everybody to map the concepts with the charts which they possess in Ami or any other tools which people use frequently.

 

[dineshN]

LT chart as discussed by Prabhsingh

Price took support three times in the past at the same level, lets see if it does the fourth time.

 

[VIKAS 21]

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support and resistence are very easy to detect on a chart and very effective to trade if combined with price action around around these lines

many people make mistake to trade as soon as price break a support/resistence

but breaking a support/resistence only alerts a trader to be prepare for the opportunity to take trade,as and when it appears

most of the times when a support or resistence broken,price comes back to retest support/resistence,and that is the time to take decision with a confirmation of price action

hope, am not disturbing the flow of thread

thanks

Nice Gurmy

YOu are not at all disturbing the flow of thread....Infact ur views about support/resistance are making the discussion more intresting...

plss keep posting....

 

[VIKAS 21]

Vikas,

Kindly can you also touch base as how to identify false high/low breakouts happening once price breaks key support/resistance levels or Pivot levels.There are times when price breaks a significant high and traders will rush to buy but price turns quickly back and never comes up letting stop loss trigerred.

For e.g LT seems to be coming at very strong support levels of 1305-1310.Now this stock is already making LH and LL levels which means trend is down but contrary to that fundamentally this stock is very strong and seems to have fallen much more than required.

Hence can we expect turnaround in this stock in coming days.What needs to be watched in order to ensure support is holding strongl?.Is it movement happening sideways around 1305/1310 levels or anything else?Also,I think if we choose LIVE stocks than it would be helpful for everybody to map the concepts with the charts which they possess in Ami or any other tools which people use frequently.

Dear Prabhsingh

For Breakout to be effective following conditions should be met out.( for uptrend)

1. Breakout out bar should have its previous PH bar in its lower 30% area.

It means its all bullish energy should be spend in making breakout effective, if previous bar is at 70-80% level of breakout bar, its all bullish energy is spent in coming out of that PH, so breakout will be a failure...

2. Breakout bar should be a big range bar.

3.Breakout bar should have great volume indicating a fight between demand & supply there.

4. The breakout bar must open at almost low & end at almost high, indicating demand taking control on supply.

5. There must not be any wick in breakout bar/or very less wick

wick indicates a failure...

6. Wait for next bar, if it close below middle of breakout bar, breakout is a failure..

7.Now wait for a candlestic pattern for a short position, if it closes below the body high of previous PH, good chances of reversal..

8. Take short position in next bar if it opens near the low of first bar....


Support : 1. a stock comes at its previous strong support level & u r in short position book ur 50% position, rest 50% will be covered when we get crack any pivot or any candlestic reversal pattern...

2. We are not concerned with fundamentals at all while analysing a stock technically bcoz it will creat a confusion...

hope it clears....

Your queries are most welcome....

 

[sanjn84]

vikas ji , is there any book , where pivots r discussed in details , also any learning material where we can get more info abt pivots , types of pivots , erl , vrl etc ,
i am asking this bcaz i am mostly confused in distunguishing between them.

u r doing a great work here , plz continue

 

[VIKAS 21]

vikas ji , is there any book , where pivots r discussed in details , also any learning material where we can get more info abt pivots , types of pivots , erl , vrl etc ,
i am asking this bcaz i am mostly confused in distunguishing between them.

u r doing a great work here , plz continue

Pivots are nothing just the support & resistance levels of price...

First try to understand how a price makes HH & HL in a uptrend & LH & LL in downtrend...keep them marking in your charts....

as your eyes will start finding these points easily , you will be able to mark them as various pivots as explained by saint sir & other seniors.

ERL/VRL TERMS are discovered by saint sir, you first get acquaint with pivots then you will be able to understand these terms....


For more information ,, search by term " STRUCTURAL PIVOTS"

1.http://www.investopedia.com/terms/s/structural-pivot.asp

2.http://www.traders.com/Documentation/FEEDbk_docs/2008/11/Abstracts_new/White/White.html

3.http://powerfinancequotes.wordpress.com/add-or-update-your-own-quote/pivot-trading/

4.http://www.pivottrader.com/pivot-trading-the-forex-markets.pdf

 

[kcsusha]

Dear Vikas Sir,
I am highly impressed by your HH,HL,LH,LL, MPH,CPH,SPH etc. May be I am a bit confused about the difference between CPH and CPL as also CPL and SPL. I shall be glad if this concept is explained with the help of Nifty Spot chart. I do not know how to post a chart. Otherwise I would have posted the same and asked you only to explain the above concepts.

 

[kcsusha]

Sorry. It should be what is the difference between CPL and SPL as also between CPH and SPH.