Nifty Future 23062017

It opened around PDC and started to move down.  There were multiple levels just below.  Looking at the price action yesterday, there was an expectation of rangebound move and with good level of support just beneath, it is not a good idea to go for a BPB short trade.  Rather it makes sense to buy around 9580-85 level with the expectation of rangebound move and earlier price behavior at that level.  Have a look at this chart,

On the other hand, Bank Nifty presented a good setup to go for short after the open and also provided another opportunity to short at range high.

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Nifty Future 22062017

It opened full gap up and found support at PDH.  At this time, there was a TST setup to go long which moved well.  After that prices could not sustain above the broader range high 9700 and presented an opportunity to go short as marked.  If someone missed this setup, markets presented another setup to go short as BPB of PDC which also moved well.

Last time I shared with you an observation that I made regarding analyzing Order Flow with the help of position buildup.  Today, I share another observation of analyzing the Order Flow by studying volume on price charts.

If you observe volume closely, you would notice a tallest volume bar at PDL.  Why the max volume happened there? What does it indicate?  Any clue?

Well, "the highest volume after a prolonged directional price move indicates mostly exhaustion of the move and likely reversal of the move."  This kind of highest volume of the day generated towards the top or bottom of the day happens mostly because of Smart Money entering into the markets.  Smart Money never sell after a major selling and never buy after a major buying.  Rather they do opposite of that.  They are ready to absorb all the buying or selling that happens there and that is the main reason for the big volume.

Today prices had already traveled around 100 points from the top (prolonged move) and were testing an important level.  Also it was a level which the Smart Money defended strongly the last time prices visited there.  Have a look at the chart,

So next time when you see such a price movement at such an important level, be ready to place your orders there and join the Smart Money.  Today joining the SM there would have yielded 25 points in less than 15 minutes.

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Analyzing Order Flow (Nifty Future 19062017)

Yesterday's analysis played out well.  It broke out the last range B at open indicating pullback or correction was over and prices were ready to move toward highs.  It in fact made the high of 9697 rewarding all the traders who believed in price reading analysis.

I would also like to share one important observation that I made today.  I discussed the same yesterday with Srinivas, a passionate trader during mentoring session, while discussing different ways to properly analyze order flow.  The observation is about reading the order flow when Nifty approaches the important level.  The order flow at the important level will give us a clue of likely outcome.  One of the ways to read the order flow is studying the building up of positions. " If large number of positions are built up at or around the level ahead of testing of that level, markets will often do something at that level."  This will produce a good trade opportunity.  Now lets discuss it on today's chart,

As you can see in the chart, there were 2 attempts made to break the important level, HOD.  First attempt was not successful, but the second was.  Now lets try to find out the reason behind this by analyzing positions that were built up ahead of these attempts.

It shows before the first attempt to break the level, there wasn't significant build up of positions, marked by red circle.  It means there was lack of conviction among the traders about the breakout. However, before the second attempt, there was significant build up happening, marked by green square.  Also there were few shorts built up just before the breakout which may fuel the rally on successful breakout, marked by red rectangle.  So the stage was set before the actual breakout and upon breakout others participated which generated high volume and made the breakout successful.

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Highest intraday profit in stock futures

I feel very happy to share with all of you that today I made a highest single day net profit of Rs. 15000 in 1 lot of stock futures since I started trading in stocks few months back.  My personal earlier best was Rs. 8500 in a single day in April 2017.

In Voltas I regret booking out at target price of 478.  So far 11:35 am it has made the low of 474.25.

Click here  for performance report of this month.

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Nifty Future Next Week

As you might be aware, Nifty is currently in a very low volatility phase and hence moving less intraday.  Once we are aware of this information, what we need to do most is, adjust to this new information that the market is giving us and trade it rather than getting frustrated and doubting our trading system.  Since the markets are in compression mode, we need to satisfy ourselves with 10 to 15 to 20 points of profit in a trade because most trading opportunities will not be able to offer more than that most of the time.

Markets need a trigger to move and unless it is able to find that trigger, it will continue to refuse to move significantly.

Now with the above vital information about the markets, let's assess how it can possibly move next week.

First let's assess what the current picture is so that based on that current picture, we can build some expectations.

As you can see in the above chart, I have marked all the valid ranges that were visible in the chart.  It is very much apparent from formation of these ranges that markets are going up.  First 3 ranges formed one above another, then a pullback in the form of A, then it resumed its uptrend and formed 4, 5 and 6 ranges.  After that, currently it is in some sort of correction or pullback and has formed range A and B, one below another in the form of envelope.

So in nutshell, currently a pullback or correction is going on in an uptrend.  Once this correction or pullback is over, we can expect the trend to resume and prices to start going up once again.

Now having got the answer about what the markets are doing currently, lets assess where this current correction can stop.

In the above chart, I have drawn support and resistance levels.  9580-9540 area is expected to work as support based on prior price action.  If it proves to act as a support, then prices can bounce from there and go towards 9700.  If this area does not lend support, then prices can likely come to 9350 level.

With this information, now it can become much easy to trade next week along with our DP's, intraday range formations and reading of price action.

You can learn too from me how to draw the correct ranges, how to do proper assessment of what is going on in the markets and how to build expectations without any bias, provided you are really willing to learn.

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Nifty Future 14062017

As discussed in yesterday's post, it did provide an opportunity to go long right at the last line of support, i.e. BRN 9600, not only once but twice.

Who showed the courage to buy right at the level without any confirmation?

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Nifty Future 13062017

It opened within yesterday's narrow range but was able to break out PDH.  After that there was no follow-through and prices formed barbwire around PDH.  At 10 o'clock this barbwire got confirmed, so it was impossible to trade that tight range till around 2:30 pm.  At 2:30 pm it broke out but again produced no good setup to trade on short side as PDC, PDL and BRN were below it, a strong line of defense.  Have a look at below chart to understand the significance of BRN 9600 level.

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