iCharts Discussions

mayurnsk

This is reproduced material, this is not my original write up. Just as I found it interesting I reproduced here, This material belongs to one Smart Trader
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Look at the picture below . You might have seen this pattern many times.

Market is in a bull trend. It pull backs and makes a low at point A. Afterwards it goes up and later returns to the same price level and print a beautiful pin bar.

As a trader what will be your action in this area?

Some possibilities are
1.You will keep a stop loss order just below point A if you are holding long position
2.You will sell just below point A expecting a breakout to the down side
3.You will go long above the pin bar with a stop loss below the candle

Will you buy at the circled area? Who bought there? Who absorbed both stop loss selling and breakout selling? Why?
Please let me know .

Regards
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mayurnsk

rvg · White Belt Joined: 31 Oct 2006 Posts: 279

Always safer to wait for Candle Close and then take action based on next candle

vinay28 · Black Belt Joined: 24 Dec 2010 Posts: 11748

Mayur, is this a quiz for which you have the answer or is it a doubt? Smile

mayurnsk · Posted: Tue Feb 05, 2013 4:14 pm Post subject:

vinay28 Hi!

You need to answer whatever you think or know about the setup, like rvg did. Instead you are questioning me Very Happy

. Its not doubt nor a quiz. It will help us all to know what do to in such scenario, right?

Regards
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mayurnsk

mayurnsk · Posted: Tue Feb 05, 2013 4:17 pm Post subject:

rvg Hi!

Yes usually thats the way we trade, but question is who buys the candle wick :-/

Regards
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mayurnsk

rk_a2003 · Black Belt Joined: 21 Jan 2010 Posts: 2734

vinay28 · Black Belt Joined: 24 Dec 2010 Posts: 11748

to me 3 looks attractive unless circled area is in a sweet zone of a +ww.

rvg · White Belt Joined: 31 Oct 2006 Posts: 279

rvg · White Belt Joined: 31 Oct 2006 Posts: 279

Mayur .. Your chart maybe incomplete .. look at chart of AdaniPower todays candle.. Chart attached.

The price was at an intersection of multiple supports.. look @ how the price broke down below horizontal price support but took support at the UTL.

Those who are only viewing the horizontal support line may see it as a breakdown .. but those who are aware of the TL support will see it as excellent buying opportunity and they BUY the WICK.

mayurnsk · Posted: Tue Feb 05, 2013 4:49 pm Post subject:

rvg
That was very good reply. But now again question arises. How that fund keeps those buy orders, with a such a precision ?

mayurnsk

mayurnsk · Posted: Tue Feb 05, 2013 4:53 pm Post subject:

rvg
I said so about precision because many a times we see such candle happens where is nothing such support you shown.

mayurnsk

rvg · White Belt Joined: 31 Oct 2006 Posts: 279

rvg · White Belt Joined: 31 Oct 2006 Posts: 279

Mayur.. Attached another chart of ITC which I traded.

This is example of trading the pattern failure.. Price broke down the Andrew Pitchfork and UTL support lines.. Stock was oversold and ripe for a risk free reversal trade.. Bought @ 270 and traded all the way upto the UTL resistance.

On Weekly timeframe this may be similar to BUY the WICK

vinay28 · Black Belt Joined: 24 Dec 2010 Posts: 11748

rvg, the bottm two candles look like harami so worth the try. good trade

sairanga19 · White Belt Joined: 28 Nov 2009 Posts: 51

mayurji namasteji, my opinion if a stock falls or rises more then thirty percent from high/low on closing basis means its entering bear/bull trend, professionals don't let to fall more then 30percent if they have buying interest on any particular stocks and they mostly pyramid their positions and they start booking profits by selling stocks to retailers they bought at lower levels once the stocks trends in their desired direction. that,s why suddenly some stocks goes sideways because professionals halts their buying temporarily, their by providing opportunity them self for buying stocks from weak hands from lower levels. u can check charts, most of the bullish stocks wont correct more then 30 percentage example icicibank,lupin, jubilant foods,jk lakshmi cements etc even though when nifty fall from high 6338 to 4531 this stocks didn't fall now trading at higher levels. so,my answer to your question is any pin bar within 30percentage of fall from high means professionals are buying that particular stock gradually,after finishing their buying they test the last significant low if volume is lower then its good chance for bargain buying
thanks ji Confused