Nifty Future Price Action 12 Sep 2012

The day turned out to be very interesting with two news event outcomes. Nifty Future remained range bound till the IIP Data announcement. On the IIP Data announcement Nifty Future spiked to the days low and sharply recovered. The second attempt of the Bears was more stronger and took out the days low and the upward trend line convincingly. Then the positive news flow of the German Court ruling had a bullish price spike that reversed Nifty Future back to the Days high. Bears again quickly slammed Nifty Future back to the Days low. But Bulls stole the show and strongly closed Nifty Future above the Days high. I have outlined the candle stick bars that have proved to be the turning point to this Bull and Bear saga.

I have described the significance of the candle stick bars below.

Bar 1: Large Doji bar with a slightly bearish closing. This doji bar acted as a trading range till the IIP data announcement
Bar 2: Breakout failure from a small range between Day Open and Initial Range low. Low trading volumes make this signal unreliable.
Bar 3: Strong breakout above the Day Open and change in bias from bearish to neutral but only breakout from the 1st Bar range would signal trend
Bars from Bar 3 to Bar 4: Typical of a trading range till the IIP Data news flow is out. The price has come back to the day open price after moving in the 1st Bar High and low.
Bar 4: The first breakout of the 21EMA to the downside is violently rejected by a bull trend bar which did not close in strength as it had a long tail at the top
Bar 5: Gap Bar printed below the 21EMA and second stronger attempt to break below Initial Range low fails. Setting up a move in the opposite direction. A potential double bottom.
Bars from Bar 5 to Bar 6: After price rejection of the Initial Range low. The up move is with small doji bars signaling weakness in up move.
Bar 6: Strong Bear Reversal Bar of the Initial Range High and High of the day. The second breakout failure. First trigger for short trade triggered
Bar 7: The prior bar was the entry bar for the short trade with the pullback to the Initial range high a short trade entry with stop loss above Bar 6.  Current Bar is a strong Bear trend bar that has a clean breakout below the day open and closes below the low of prior 10 bars signaling to tighten the stop loss to two ticks above the Days Open.
Bar 8: Strong Bear Trend bar with a clean breakout from the Initial Range low and low of the day and the upward trend line. Strong down move signals to tighten stop loss just above the 21EMA and upward trend line.
Bar 9: Small doji bar with a bull body which pulls back from the Previous Day High. Down trend is still intact continue with short position. Possible addition to short trade at pullback to Initial Range low.
Bar 10: Strong Bull twin reversal bar closes at the Initial Range low. First sign of trouble price is very close to stop loss. Continue to hold short position but do not add to short even though pullback to the Initial Range low.
Bars from Bar 10 to Bar 11: After Bar 10 price prints a inside bar and another inside bar. This is a ii pattern and is a consolidation before breakout in a pullback or reversal in a trending move. The second sign of trouble close short position at the market.
Bar 11: Small doji with bull body with close above the Initial Range low  signifying that Initial Range low is no longer a strong resistance
Bar 12: This Bar started off as a very strong Bull Bar till the Initial Range High but Bears attacked with huge volume and forced a close at the days low and below the 21EMA and the upward trend line. The first sign of a strong but failed attempt at up move.
Bar 13: Two bars prior to this is a single doji bar break out failure to the upside of the Previous Day High. The prior bar is a single bar breakout failure to the downside of the 21EMA and the current bar is a very strong Bull trend Bar that closes at the Days high with very high volume. The next bar after this with even more higher volume maintains price above the Initial Range High. This massive trend reversal spike with huge volumes has trapped Bears and if first pullback is shallow then price will close at the days high. This becomes a always-in long trade and every pullback is a long addition trade. Expect the Bears to be squeezed to death.
Bar 14: Small Doji bar with bullish body that tests the upward trend line. Add a long entry with exit at the days close. Stop loss below the 21EMA as price volatility could return.
Bars from Bar 14 to Bar 15: Clear Spike and channel trend with price forming a wedge formation showing desperation of Bears to close position at every pullback. In spike and channel trend there will be a lot of bear trend bars that appear to be reversals but in a spike and channel trend never enter counter trend trades till there is a clear break of both the 21 EMA and the trend line.
Bar 15: This is a clear trend channel overshoot a first sign of reversal but this has appeared in the last five minutes of the days session. Clearly the last Bears have closed their position either voluntarily or their Brokers closed their positions.