Today was expiry day and despite weak global cues Nifty Future opened gap at the Big Round Number 5700. The first two bars were big bear trend bars that brought Nifty Future below the Previous Day high. Nifty Future broke out of the Previous Day high and in a tight upward channel that had started from the Previous day moved till the days high and the opening price of Nifty Future. Lack of buying at the days high resulted the resumption of the morning session bearishness. Nifty Future broke the days low and tested the Previous Day low and tested the Nifty Spot level of 5648 and closed above it. Today despite being a expiry day there was increased volatility and very good trade entries
I have posted my observations on the significant candlestick bars.
Bar 1: Nifty Future opened gap up as a continuation of the previous day upward channel. This bar was the first bar and large bear trend bar.
Bar 2: This is a continuation of the Bar 1 down move and falls back below the previous days high. Bar 1 and Bar 2 would be the reversal bar for gap up open that resembles a price spike.
Bar 3: After the pullback inside the Previous day high, price prints doji bars around the Previous Day High. This Bar is a reversal bar that bounces from the upward channel and is close to the 21EMA. Add a long trade at the trend line touch with stop loss below the 21EMA and target would be days high.
Bar 4: This is a bear trend bar that breaks the upward trend line and pulls back to the Previous Day high. This is again another addition of long trade with stop loss 2 ticks below the Previous Day high. Target would be the days high. The next bar would be the swing low for drawing second trend line from the days low.
Bar 5: This is bar that attempts to reverse the move above the prior high but closes above the prior high. The next bar is a strong Bull trend bar. Trail stop loss just below the Initial Range high.
Bar 6: This was a strong bull trend bar that is a TCL overshoot and a probable sign of end of the up move. Exit at the next sign of strength or break of the upward trend line.
Bar 7: This is a doji bar with bear body that breaks the upward trend line. Exit long trade as price is close to the days high.
Bar 8: This is a strong bear trend bar that breaks the second upward trend line and the 21EMA. Price prints a gap bar below the 21 EMA and then moves above the 21EMA to test the price extreme and the upward trend line. The break of 21EMA in one leg is a sign of a probable end of up move. First sign for adding a short trade entry.
Bar 9: This bar is the failed test of the second upward trend line and provides the second swing high to draw the downward trend line.
Bar 10: This bar is a very strong Bear trend bar that closes below the low of the prior 8 bars and closes below the Initial Range High. This is the second strong sign of down move. The next bar is a failed attempt to reverse the price above 21 EMA but closes above the Initial Range High. This bar is the swing low for the third upward trend line joining the days low. A break of the third upward trend line would be a short trade entry.
Bar 11: This bar closes above the 21EMA but the next bar is a twin bar breakout failure and reverts price below the 21EMA. Two bars after this bar is another failed attempt to close above the 21EMA.
Bar 12: This bar closes below the Initial Range high and the third upward trend line. Add short trade close to the Initial Range high and with stop loss above the third upward trend line or the Initial Range High. Target would be the days low.
Bar 13: This is a single bar test and reversal of the days low and the Previous day high. This is a trend channel overshoot so exit the short trade at the market close to the days low. The next bar is a continuation of the down move in a steeper downward sloping channel. Since this trend channel line overshoot is at the start of the down move after a period of consolidation. It cannot be classified as a climax bar.
Bar 14: This is a reversal bar that reverses the prior bars attempt to close above the Previous Day high. Add short trade close to the Previous Day High with stop loss two ticks above the Previous Day high.
Bar 15: This bear trend climax bar that overshoots the steeper downward channel. Exit short trade close to the Previous Days low at market. This is a second trend channel line overshoot of a steeper downward channel and the speed of down move is not sustainable. First sign for adding a long trade.
Bar 16: This is a strong bull trend reversal signal bar that is part of three bar reversal. The entry bar is also a strong bull trend bar. Add long trade at the entry into the steeper downward channel in the entry bar with stop loss below the days low. Large stop loss required due to heightened volatility. Not a very favorable risk to reward trade.
Bar 17: This is a strong reversal bar that reverses the move above the Previous Day high and the less steep downward channel. This bar closes at the 21EMA. Exit long trade at the break of the previous Day high. The next bar is an entry bar which is a single bar reversal of the move below Initial Range low and Previous Day Close.
Bar 18: This bar is a very strong reversal bar that is the second breakout failure of the Previous Day High and a double top. The second breakout failure is a stronger down move resumption. Add short trade at the next bar with stop loss 1 tick above Previous Day High. The target is the days low.
Bar 19: This a strong bull trend reversal bar and a breakout failure of the Previous Day low. This is the first breakout failure and not likely to be a up move resumption. Exit the short trade at the days low.
Bar 20: This is a strong reversal of an up move attempt and is a twin bar reversal that brings price back to the days low.
Bar 21: The last three bars of the day are a ii pattern or a inside bar inside another inside bar. This is a reversal pattern if there is a down side breakout then it has a high probability of failing.
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