Perspective on Support Resistances & Context of The trend.

Below is one of the trades that I recently posted and how it worked post the trade idea was created. The post is not to talk about the profit of the trade etc. but what are some learnings and observations from the trade set up and such patterns keep occurring and can be used for future trade set ups as well.

First the trade Summary:

Posted on 20JUN: #USOIL #CL_F consolidating in a range. likely to take off if 66 is taken out for a quick test of 68.5-69 range (Price then 65.47)

Result: Price on 23 Jun : 69 USD

So how was the trade idea generated in the first place: we had series of lows on lower volumes and any sustained follow ups, while a big resistance zone laid ahead at 66 levels where we had a series of tops. So what that meant was while the buyers were not active the sellers didn’t find any follow up trades. What could this mean be that there were no new sellers emerging at the lower levels. Hence a contrarian buy idea if the level was crossed as that would mean sellers would have to force close the trade and could lead to short covering.

USOIL time for take off by PowerTrades on TradingView.com

How did the trade span out?

• .We did move to cross 66, failed to sustain and fell back to test the lows.
• Trend lows again gets respected.  And here is the catch here, just a trade based on support and resistance could had meant a trader would have reversed the trade there, while what was at best needed is to close the trade and look for a follow up on either direction, this comes from the context of the trend and that markets have failed to fine new sellers at lower levels.
• Keep looking for an active trade on test of 66 and above or an aggressive set up could mean even a quick reentry once low was respected.
• 66 again gets tested and this time on June-22 the lows fail to get below 66. So what was a resistance previously has now become a support, that’s a key observation to take home. – This is another opportunity for an aggressive trader to potentially take a low risk add up positions. And once there is no push below 66. boom it takes off.
• Where does it pause. exactly at a low volume node, which again coincides with previous swing highs. hence that level acts as a double confirmation.

So, many lessons and pointer in a single trade journey. As a trader this is the observation and process to take home irrespective of the time period we trade. . S/R alone can lead to lot of whipsaws on false highs or lows. Trading on the alone could have led to 2 false trades in the above trade journey.

Trying to understand the context of market can do, in conjunction with support resistances is a powerful tool

BANKNIFTY Setup and Trade Plan Week Starting 21May

Banknifty bucked the trend for the past few weeks, indicating a potential near term top
formation in the charts. This weeks most traded volume at 26450 will mark a significant
resistance zone and should be the range for the intermediate top ; i.e. to mean if we hold
the theory that markets have marked a top here, this level got to be respected, else the
hypothesis falls flat.

The downside was arrested late hours on Friday , when markets took  support at an
intermediate levels, and until we break below 25650 zones we are likely to see some
consolidation and short term pullback possibly as well. This also coincides with NF, which
found a base near prev zone of 10560 levels.Now we could play out the below 3 scenarios
and plan my trade as per that-
I.pull back to test the 26050-26100 zones and keep within the range of 26150-26750 in coming sessions
II. pullback to the range of 26050-26150 and manage to breakthrough to test 26450 and higher again
III.Break through below 25750 and and test 25320 zones.

I would try and potentially trade a short term pullback as that offers a lower risk reward if we get a

favorable set up , or /and look for a pause and turn around from the 26050-26150 zones towards the
downside. Overall at higher levels keep a bias of short on rise to test the weekly lows and lower
levels of 26500-350 zones , this until 26450 is cleared.

Banknifty Set up Profile and Trade Plan Week 16Apr -2018

Banknifty marked a major consolidation in terms of the smallest weekly range on the weekly charts.

A quick recap of the previous week shows that the low marked couldn’t even get into the previous week’s value area, indicating that buyers emerged aggressively in dips. This resulted in the value area shifting higher as well significantly.

This indicates that the coming week will continue to be a consolidation zone with an upward bias for the traders.  The Banknifty PCR remains at 1.45 and the max pain at 25100. Support is likely to emerge in any dips to 25000-24940 zones and should see buyers emerging until markets cracks below that levels or breaks 24850.

On the upside resistance will be seen @ 25540-25600 zones and should see pull backs from there. Until the marked range in green and red doesn’t break in the below volume profiles charts we should see markets consolidate and set up base for the next direction.

BankNifty Near Term Scenarios and potential trade setups

Banknifty marked a good late pull back in the last week of the series to test the weekly vwap @ 24500 levels. And managed to close below it @ 24300 zones. From a monthly candle perspective, we still formed a negative candle, where monthly highs tested the Jan lows but failed to go past it.

Now here are the few trade scenarios from here:

1. Markets manage to respect immediate 24250 zones and pull back to cross 24500, it can test 24800 levels where a lot of selling pressure may emerge. Above 24800 markets can go on to test 25200 and 25500 levels.
2. On the downside if markets break below 24100 it can test upto 23800 zones. Real selling pressure may only emerge on the break of that.

What could be interesting is that markets manage to test 24100 or lower and manage to pull back to do a test of 24800 in the coming sessions. Then we can see a direction emerging.

BANKNIFTY FUTURES WEEKLY RECAP- 16 MAR & PLAN AHEAR

Banknifty had a very interesting last week, it started with the buyers pulling it back and ended up towards friday with sellers exerting a downward thrust.
at the end we closed with in a fairly balanced situation from the week perspective. Now until the lows near 24100 are broken we are still with an open chance to extend a pullback on the upside before the downard shift begins.

There are 3 possibilities that emerge for the current week 1. we continue to trade between 25000 and 24300 zones and consolidate further 2. we see a downward shift and 
break below 24100 and 3. we manage to respect the lows and consider it as an intermediate bottom to break on the upside past 25150 to test 25500 levels.

BankNifty Multi Time frame Perspectives. Trading Ideas to plan your setups.

Hell it’s been ages since I posted here, although Have been regular on twitter and facebook, but it’s worth an idea to put down some perspectives on multi timeframes to help plan the trade over the next week and the next month or so.

Lets drill it down from a top down approach and try and establish how the levels converge. We will typically use price action charts, retracements and some levels.

On the long term charts the monthly charts here Banknifty (BNF ) Has formed a clear top with a tweezer top formation that clearly establishes a bearish reversal pattern and is usually followed by 2-3 months of intense selling and pullbacks marked at the lower end of the top. We had a follow up selling month already. Based on this chart pattern until 26000 levels are crossed its going to be a sell on rise for larger time frame traders.  On the downside there is a definite possibility to test 22600 levels.

BankNifty Monthly Charts

 Coming to Daily charts, we seem to have formed a temporary base near 24100-150 levels and until that level holds, its likely for a short to midterm pull back on the charts, whether that can last a few days to a few weeks, it will unfold over the next week or so. On the upside we have 3 primary zones to watch out for 25000 being the first one, then 25450 levels and then above that a tight band of 25650-25850 zones. Which is unlikely to cross for the downside view to hold. How strong will the pullback will be determined by local and global cues. The above scenario becomes null if we break below 24100 zones. In that case its time to look from the longer term perspective.

Banknifty Futures Daily Charts

Coming to immediate short term charts, last week we almost closed at the highest traded zone of around 24300 zones. Long term players are likely to emerge if we manage to move above 22380 levels, below that expect market to remain non conclusive.  Moving above that we can hit the 24650 & 24850 range on the upside, where it would be prudent to book gains and look for a reversal opportunity for swing players. Again this hypothesis holds good if we manage to hold the 24100 zones. If that zone fails below that we should aim for 23600 and 23100 levels.

Banknifty Futures short Term Charts

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US Elections Dates And Trading Plan for Next Few Sessions

US polls Starts on November 08 and results are expected to come out by November 9^th in the next 24 hours.

The race for the 45^th president of United States has picked up some pace and has become much closer than that anticipated.

The race is between Hillary Clinton (Democrat) and Donald Trump (Republican). US elections are a two party system.  The markets in large favors the Democrat, partly for two reasons. 1. It kind of maintains a status quo with respect to policies of the democrat already pursued by Obama and 2. Mainly because Trump’s views are perceived as nationalist right wing and hence he favors trade and employment protection, which markets and businesses hate in general.

This is an event which is neither in our control or hands to predict or make work, however one might say. The thing is that there are only two possibilities so by random behavior 50% of predictions will be correct.

Lot of traders fail in the business of trading is because they perceive to believe that markets will work their way, while it is way beyond their control. Do we know the outcome- No, Can we trade the Outcome- Probably Yes. But the smart bet will be to trade it with a plan where the risk is capped, or the potential to earn on a move on either side. 

Knowing to manage your risks and protect your capital is more than half the job done.

This is where systematic trading / mechanical trading gives in the discipline to follow a strategy over and over again rather than being speculative.

The race recently picked up some steam because of possibilities of black votes swinging in favor of republicans and the alleged accusations into the email controversy. At the time of writing this, FBI has given Clinton a clean chit.

The Results will mostly by out by November 9^th, 2016 9:30 AM IST

.How are markets expected to react?

Expect a volatile November series for the rest of the month, hence there can be possibilities of short bursts of directional trades. Advice would be to trade a time frame lower in this case to lock in gains. Especially until volatility subsides. This means if you normally trade daily charts, adjust and trade hourly charts.

My own hunch is that that even after that till the Christmas breaks market will remain a volatile traders market.

From a technical point of view until the base of 8450-8500 holds we will expect an upside. In case Clinton wins, which is a still better probability we can see a bit of euphoria for some time

To trade the markets, I advise that traders use our ProQuants Hedged strategies and manage the risks while ensuring good returns too.