Reading a Chart Bar by Bar

[SuperTrader]

Price Action Psychology 1

In between in random I am going to post these small tips on price action particularly relating to psychology.

Below is the chart of Nifty. I have marked 6 bars.

When we entered Bar 1, on candlestick patterns it signifies pure reversal pattern and hence those who have missed the move from 4600 to Bar 1 would now be calling for exhaustion and reversal. As bars 2,3,4,5 develop, more and more voices begin to claim the trend is over as on smaller time frame a small range begins to form. Bar 6 has to be read as a Bullish bar because by the time bar 4,5,6 develop, neither of the days violate the previous days low and though bears are reading this as a negative sign (since they are not in trade), this is to be seen as extremely bullish as market is refusing to go down despite claims of trend being over. This is why yesterday near day's end I told that 5500 is just around the corner. What we have seen today is very similar to what happened few days back (circled in red). Now from tomorrow we need to see where we move and how trails must be placed.

But as far as pure price analysis goes, while reading a chart, keep in mind the points I have mentioned above. Every bar has a psychological impact on you and it has on your opponent as well. If you put yourself in his shoes and think, then with some degree of certainty, calling market turns and direction becomes easier.

[Benzujk]

Thank you so much for the lessons sir. Highly appreciated.

[SuperTrader]

Strong Distribution Day

Let us start looking into what constitutes a strong distribution day. Strong Distribution is nothing but a market session where the main index along with the index components and broader markets comprising of Midcaps and Small caps show visible signs of delivery based selling. Such visible signs are mainly volume related when compared to the action on previous day. A Strong distribution session signals an downtrend, unless and until it is encountered by a Strong accumulation session wherein the markets would then be in a uptrend. Such days are usually extremely negative for the market and form good S&R levels for active traders.

So basically, we need two conditions for a day to be accounted for as Strong Distribution day,

1) Price should be lower than yesterday's close and should be in a WRB structure, and
2) Volumes should be higher than that of yesterday's session

Once we get these conditions, we should presume the market to be in a short term downtrend. This downtrend can be reversed once we get a strong accumulation day or a weak accumulation day.

Identifying a Strong Distribution Day



5630 (HOD) now becomes a tough resistance for the markets as it has occurred on a day where the market has signaled short term reversal.

[Newbie]

sirjee aap batate ho to trading kitni aasan lagti hai ... kahan hum mechanical trading karte hain ye soch kar ki market humse points chin leti hai... aur kahan aapki baaton se lagta hai ki points to gift ho rahe hain ... apan hi kahin timbuktoo main ghum rahe the... anyhow ur eforts are most appreciated...

[SuperTrader]

sirjee aap batate ho to trading kitni aasan lagti hai ... kahan hum mechanical trading karte hain ye soch kar ki market humse points chin leti hai... aur kahan aapki baaton se lagta hai ki points to gift ho rahe hain ... apan hi kahin timbuktoo main ghum rahe the... anyhow ur eforts are most appreciated...

Thanks Newbie. Bar by Bar chart reading is not as hard as it is made out to be. Hopefully can decode price action here with Nifty's daily movement.

[krishere]

But as far as pure price analysis goes, while reading a chart, keep in mind the points I have mentioned above. Every bar has a psychological impact on you and it has on your opponent as well. If you put yourself in his shoes and think, then with some degree of certainty, calling market turns and direction becomes easier.

kya baat!!! kya baat!!! kya baat!!!!

well thnx for giving me a new perspective.... should start visualising market as a chess board.... and then think.... hmm..... well i think im good @ it so may be this angel of thinking might make my mind clearer..........

once again.... kya baat!!!! kya baat!!! kya baat!!!!