Friday, 19 May 2017

Nifty Future 19052017


Yesterday it showed the sign of volatility coming back to the Index trading after a long long time. Today it opened within yesterday's range and made a counter-trend up move which failed at the confluence of BRN and PDH.  This presented a nice BOF setup to go short.  If trailed properly, this setup generated a profit of 70 points plus.  After this big 100+ move, it was expected to take some rest and remain range-bound which it did.

How to read the price action at BRN PDH level for BOF setup:
1) Trend:  Nifty in a micro trend decline mode.  It is a very fresh trend which just started yesterday.  Since the trend is fresh, we can expect a good move in the trend direction.  So lets look for the setup which allows to trade with the trend.  BOF of BRN PDH will be the good setup.
2) Location and earlier price behavior:  Confluence of level BRN & PDH, so a good location.  Last time, yesterday, when the prices reached at the same level (BRN), it worked as a energized fencing and forced the prices to go away from the level quickly.  If history repeats itself today, we can expect the same thing at the same location today also, i.e. prices going away from the level very quickly.
3) How the prices reached there and possibility of reversal:  Prices reached there with orderly pull backs, traveling around 50 points.  This indicates critical mass probably took position in this counter-trend up move.  Also CT moves of 40-50 points normally gets exhausted at the strong S/R level.
4) Pattern:  Breakout of the level was good with good volume.  But even with this good BO, follow-up buying did not come.  This indicates prices unable to move higher.  So now if this BO fails, it will trap not only BO traders but also the critical mass.
5) Risk reward: It is more than 1:1 if the prices reach to LOD which can act as FTA.   If it breaks LOD it came go to PDL PDC to fill the gap.

This is a kind of rare setup where everything supports like trend, location, space, PA, critical mass, pattern etc.  How a trader following DP trading tactics can miss this trade!

If you put an effort to read the prices this way, you will have lot of confidence to take such setups. If you want to learn how to read the prices this way, take the help of Consistent Trader video tutorial which focuses on reading the PA and finding the good setups with ease.

2 comments:

  1. Hi,
    Since i am in learning more, I am not trading, but a BOF of day high was observed in spot at 9489 with stop of 9501 which travelled smooth till BRN while filling the gap on expected lines...
    The details help us see other elements too..but DP based thought process works.

    ReplyDelete