Learning to catch High Probability Breakouts
- Thread starter amitrandive
- Start date
- Status
Market can only do three types of things up,down sideways,but that is not all that characterizes the market movement,
I have found that we can fit almost every move made by market into 4 types of movement categories,The following image represents those types.
You can reverse them and use them as a resistance or down move you catch my drift.
Image A:
The image A represents a fast move,almost all pinbars,and rejection and touch and go bars fall into this categories.
Amandeep asked sometimes we don't get any PA and price just shoots up these are that type of bars.
My answer to go about them is simple,we don't try to catch the immediate reversal instead we let price shoot from the point and knock sideways into a range and place our entry in the second test in sideways range.
Pretty simple just let price shoot up,and start dropping at some point and make a low and let it rise,then buy at the second test marked by black lines.
Continue to check the higher time frame for how the bar looks like ,only then consider buying on second test in the range
If price never goes sideways,then bad luck you don't enter,move is too fast for you to take.
Example of nifty and how it has a stride and ranging periods:
In nifty while i did my TA on it i figured that it actually moves too fast,it trades once a day for 6 hours and it has a stride in one direction.
So most of the time nifty moves like a fast move with pivot highs cracking in the direction decided by the higher time frames.
But one most striking observation i noticed is the ranging periods in each day in nifty,which is related to what i suggested in the image A and D.
Market opens with the breakout pressure close to 915 and goes sideways by the time till 1030 which then further breaks close to mid day then market ranges again by 1330.
I typically observe the periods when price ranges so i just observed it,because ranging periods give chance to enter in a trend,
Following image shows a few considerations while trading types of bars that fall into image A category.
Normally trading it:
When higher time frame doesn't agree with it,you see both of the below actually are not that fast,you have to see them and it will all come to you.
Anyone can tell they are not fast anymore they are slow.
The Key is to know what higher time frame looks like they will decide what will happen and what PA will form.
Image B
Image B is Double Bottom or Top
Price moves in the zone reacts with good bullish engulfing bar and pattern on higher time frame starts looking bullish,and then you trade the second test with stop below first bullish engulfing.
In here you also have to be careful if the price while approaching second test isn't too bearish and how does higher time frame looks like ,when price first reacted from the zone price should look good on the higher time frame ,bullish enough to break the high of last bar on higher time frame,and while going back to zone price should be less bearish.
The Pattern officially resolves when neck line breaks in one bar and price moves up above neckline.
If pattern breaks below first bullish engulfing strongly in a single bar, it is no longer valid.
If pattern rejects below first engulfing bar and frms another bullish engulfing you do the trade again at your own risk thresh hold.
Image C
Image C shows a support.
They don't necessarily look strong as they don't always form engulfing bars on all tests but they still can drop price if the price stays in them for long time.
We trade them as close to high or low(in case of uptrend high vice versa for down trend),when price is approaching the zone and is forming a support we let price drop ,then trade second test if good pattern is there on second test(price should stay in black line after rejection)second test and all subsequent test must always cause price to reach same lows.
If price is not reaching same lows it can be bad,and it may not be support it can be a triangle or breakout formation.
Alternatively you can trade the support to trade in direction of trend rather then reverse it,if you feel support is going to fail,just buy/sell on the exact opposite side.
If you don't want to trade the support at high or lows just trade the support after neck line breaks,but your stop will be big and chance of getting caught in rejection high.
Image D
This is just a Bull move or a bear move,
Price moves in one direction makes range which you can call support then support breaks,then move continues.
You always enter on second test of the ranged move.
As with the fast move you need to be careful not to buy second test if pattern is bad on higher time frame.
Simple isn't it
The Characteristic moves
I have found that we can fit almost every move made by market into 4 types of movement categories,The following image represents those types.
You can reverse them and use them as a resistance or down move you catch my drift.
Image A:
The image A represents a fast move,almost all pinbars,and rejection and touch and go bars fall into this categories.
Amandeep asked sometimes we don't get any PA and price just shoots up these are that type of bars.
My answer to go about them is simple,we don't try to catch the immediate reversal instead we let price shoot from the point and knock sideways into a range and place our entry in the second test in sideways range.
Pretty simple just let price shoot up,and start dropping at some point and make a low and let it rise,then buy at the second test marked by black lines.
Continue to check the higher time frame for how the bar looks like ,only then consider buying on second test in the range
If price never goes sideways,then bad luck you don't enter,move is too fast for you to take.
Example of nifty and how it has a stride and ranging periods:
In nifty while i did my TA on it i figured that it actually moves too fast,it trades once a day for 6 hours and it has a stride in one direction.
So most of the time nifty moves like a fast move with pivot highs cracking in the direction decided by the higher time frames.
But one most striking observation i noticed is the ranging periods in each day in nifty,which is related to what i suggested in the image A and D.
Market opens with the breakout pressure close to 915 and goes sideways by the time till 1030 which then further breaks close to mid day then market ranges again by 1330.
I typically observe the periods when price ranges so i just observed it,because ranging periods give chance to enter in a trend,
Following image shows a few considerations while trading types of bars that fall into image A category.
Normally trading it:
When higher time frame doesn't agree with it,you see both of the below actually are not that fast,you have to see them and it will all come to you.
Anyone can tell they are not fast anymore they are slow.
The Key is to know what higher time frame looks like they will decide what will happen and what PA will form.
Image B
Image B is Double Bottom or Top
Price moves in the zone reacts with good bullish engulfing bar and pattern on higher time frame starts looking bullish,and then you trade the second test with stop below first bullish engulfing.
In here you also have to be careful if the price while approaching second test isn't too bearish and how does higher time frame looks like ,when price first reacted from the zone price should look good on the higher time frame ,bullish enough to break the high of last bar on higher time frame,and while going back to zone price should be less bearish.
The Pattern officially resolves when neck line breaks in one bar and price moves up above neckline.
If pattern breaks below first bullish engulfing strongly in a single bar, it is no longer valid.
If pattern rejects below first engulfing bar and frms another bullish engulfing you do the trade again at your own risk thresh hold.
Image C
Image C shows a support.
They don't necessarily look strong as they don't always form engulfing bars on all tests but they still can drop price if the price stays in them for long time.
We trade them as close to high or low(in case of uptrend high vice versa for down trend),when price is approaching the zone and is forming a support we let price drop ,then trade second test if good pattern is there on second test(price should stay in black line after rejection)second test and all subsequent test must always cause price to reach same lows.
If price is not reaching same lows it can be bad,and it may not be support it can be a triangle or breakout formation.
Alternatively you can trade the support to trade in direction of trend rather then reverse it,if you feel support is going to fail,just buy/sell on the exact opposite side.
If you don't want to trade the support at high or lows just trade the support after neck line breaks,but your stop will be big and chance of getting caught in rejection high.
Image D
This is just a Bull move or a bear move,
Price moves in one direction makes range which you can call support then support breaks,then move continues.
You always enter on second test of the ranged move.
As with the fast move you need to be careful not to buy second test if pattern is bad on higher time frame.
Simple isn't it
The Characteristic moves
http://www.traderji.com/technical-analysis/99967-demand-supply-zone-trading-3.html#post1118773
It is not the question of Lucky....enjoying the ride...we should have only one view...you have multiple views last 5 months...see all your post..... how you will ride the run if you have multiple view on bull run..
I am not criticising you...telling the fact...we all have this weaknesss..we have to accept..
I am not criticising you...telling the fact...we all have this weaknesss..we have to accept..
Rish... u may be correct... this year when I started my portfolio July month... nifty was 7800 level.. and today also its same level... but I am up by 22%... I am satisfied with my performance.. bez trading is passion for me more over I am having a job.. and I use my mobile for placing orders... and I could manage nearly 45 stocks portfolio at a time with my mobile... I hope next bet will be good for me...
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| F | Learning to Fish | Technical Analysis | 10 |
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