Thursday, 22 June 2017

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.

5 comments:

  1. Good observation, and gr8 trades, have to learn many things from u

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    Replies
    1. Raghav

      As a trader, we need to keep learning from Markets and other traders. That is the only way to improve.

      URD

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