Chart Analysis

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•Traders have a tendency to immediate

think that using micro timeframes is
the key ingredient to scalp trading
success

•Traders also focus on sophisticated

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tools, tactics, and techniques for trying
to “beat” the markets
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2
Price
Action
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2 3
2

1 2

2 Bullish moves on lower

time frames

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2

ENTRY

Higher highs and higher lows

Major Up Trend provide evidence of bullish price
•Higher Highs action/uptrend
•Higher Lows
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Price
Higher Action Price action from prior day close
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Timeframe Gap Up
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Flat Open How much?

Gap Down

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Phase 2
•Up trend
•Higher Highs & Higher Lows
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Higher
Price action from prior day close Timeframe
www.dailyniftytips.in Gap Up
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How much of a gap?

Gap
2. Bullish Rally

Flat Open

Prior Day
Close IntradayMoney.in
Gap Down Phase
2
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Higher
Price action from prior day close Timeframe
www.dailyniftytips.in Gap Up
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Prior Day
Close

Flat Open 2. Bullish Rally

Gap IntradayMoney.in
How much of a gap?

Gap Down Phase

2
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 Use the Market Cycle to identify whether price action is trending or non-trending
 Use trending criteria and Fibonacci retracements to gauge
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 Higher highs and higher lows, higher openings implies uptrend
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 Lower highs and lower lows, lower openings implies downtrend

 Chart formations & patterns with setups and confirmation of price testing extremes of patterns

 Identify beginning of trending price action

 Prior price action contained in upper and lower boundary, or

 Overlapping price action

 Anticipate end of trending price action


 Trending criteria is NO longer valid and satisfied
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Use very detailed chart analysis and Fibonacci retracement analysis to gauge quality and speed
of trend, respectively
 Look for prior pivot highs/lows, flag patterns, broadening patterns and/or triangles for
confirmation
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Price
Action
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Ideal trading
situation
Higher
Opening Ranges

ENTRY
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LONG Entry
•Up trend
•Higher Highs & Higher Lows
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Pre
Morning Mid-day Late day After
Market
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Session
only sure shot tips...! Session Session Hours
Session
Gaps
•Fills Failed Momentum
News Events News Events
Patterns Rallies
Opening
Range

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Overnight Reversal Reversal
Reversal Times Analysis
Futures Times Times

News Events
Volume Volume Volume
Analysis Volume Declines Returns Declines
Increases
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 Strong Buy After W Patterns

 Focus only on long trades during uptrend

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 Look
only surefor flag patterns,
shot tips...! broadening patterns or triangle patterns
 Only consider at most 3 trade setups in up trends

 Why? So you can focus on trading with the direction and 1st trade is W pattern and next two trades
are likely to follow from natural pull backs (i.e., 3 or 5 Elliott Wave)
 Strong Short-Sell After M Patterns

 Focus only on long trades during down trend

 IntradayMoney.in
Look for flag patterns, broadening patterns or triangle patterns

 Only consider at most 3 trade setups in down trends

 Why? So you can focus on trading with the direction and 1st trade is M pattern and next two trades
are likely to follow from natural rallies backs (i.e., 3 or 5 Elliott Wave)
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 Strong Buy After W Patterns
 Identify previous Phase 4 downtrends
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 Identify sideways price action (Phase 1)
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 Wait for confirmation that support has held and prices are moving in an uptrend with higher highs
and higher lows
 After price action breaks above the neckline of the W patterns, buy 1.5 x normal position size
 If risk is acceptable, place stop under pivot lows or underneath Phase 1 lows
 Strong Short-Sell After M Patterns
 Identify previous Phase 2 uptrend
 Identify sideways price action (Phase 3) IntradayMoney.in
 Wait for confirmation that resistance has held and prices are moving in a downtrend with lower
highs and lower lows
 After price action breaks below the neckline of the M patterns, Short 1.5 x normal position size
 If risk is acceptable, place stop above pivot highs or above Phase 3 highs
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Quality Trends Inferior Trends
 Most opening prices will be in the area of  Most opening prices will not be in the
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the prior bar’s close (NOT a lot of area of the prior bar’s close (lots of
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overlapping bars). overlapping bars).
 New bar moves in the same direction of  Close may or may not move in the
the prior bar’s direction. direction of the prior bar’s direction.

 New bar’s open and close are near the  New bar’s open and close may not be
near the bar’s extremes.
bar’s extremes.

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 All of the above create uncertainty –
 All of the above create certainty – few
many Gaps, Tails, Engulfing, Piercing , or
Gaps, Tails, Engulfing, Piercing , or Outside
Outside bars.
bars.
 Often, pullbacks break through areas of
 Often, pullbacks reverse in the area of
minor Demand or minor Supply.
minor Demand or minor Supply.
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3. Sideways Topping Action

Focus on Speed of
Focus on Speed of
downtrend
uptrend

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Short Setups
Long Setups

1. Sideways Bottoming Action 1. Sideways Bottoming Action

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only sure shot tips...! 2 3
2 1
1
3 1
Up Trend 2 3

1 2 3
Up Trend
breakdown
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Breakout Breakdown

Odds of success depends on higher timeframe Market Cycle

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TARGET Price
Action Price
Action
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only sure shot tips...! REWARD
ENTRY

RISK
200 MA
STOP
20 MA

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Consider
ENTRY
STOP - Trailing 20 MA
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Odds of success depends on higher timeframe Market Cycle

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Down Trend
Breakout Breakdown
breakout
Down Trend 1 2 3

1
3
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2 3 1

2
1
2 3
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SHORT

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STOP

RISK
ENTRY
Higher
200 MA
Timeframe
20 MA
Phase 4

TARGET IntradayMoney.in

Consider
STOP - Trailing 20 MA
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One of the most common reasons for failed trades is the inability to
distinguish Quality trends from Inferior trends.
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Quality Trends Inferior Trends
 Quality trends have a higher level of  Inferior trends have a lower level of
predictability and certainty. predictability and certainty.

 Controlled price bar arrangements and  Uncontrolled price bar arrangements

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controlled pullbacks that reverse at and uncontrolled pullbacks that
supply or demand lead to certainty. reverse at supply or demand lead to
uncertainty.

You Must be Able To Distinguish Quality from Inferior Trends, THEN be

Disciplined Enough to Trade Only the Quality Trends.
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 Trend Strength Attributes
 Trend angle
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 Correction angle
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 Quality
 Distance between major pivots
 Bearish candles in an uptrend result in insignificant price corrections
 Time vs. price correction
 Pivots provide the market’s reference point in shifts between Supply and Demand.
 No trades exist if there are no clear voids between Supply and Demand.


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Deep moves into Supply and Demand create an opposing void to consider.
The deeper the move, the greater the odds of moving through it.
 Certainty (or the lack thereof) can be seen in candle arrangements.
 By definition, breaking a major pivot will break a trendline.

Proper Trend Analysis leads to High Probability Trades!

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• By focusing less on naming

conventions and more on the “What-
How-Why-Where-When”, traders are
more equipped to identify trending
price action and exploit it for profits

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with the use of candlesticks

•Candlestick patterns provide a hidden

confirmation of price action and its
anticipated “next likely steps”
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Bullish Bearish
Engulfing Engulfing

Bullish
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50%

50% Piercing Bearish

Piercing
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Short Entry Initial Stop
Setup Fibonacci
Retracements
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A
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C
2
1

2/3 Bar
3
Reversal
Entry
B

Flags
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Preliminary
target
Most traders only focus on at most the potential chart pattern, or the candlestick reversal
pattern…and ignore the price action reaching the preliminary target as…
confirmation of trending price action
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Transition Among Phases

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2 3
B A
3 Parallel 2
C
Flags
Flags 2
1
1
C 3
B

2
A
3
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1
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Reference for Trend Quality

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Quality Trends Inferior Trends
 Most opening prices will be in the area of  Most opening prices will not be in the
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the prior bar’s close (usually <20% into the area of the prior bar’s close (usually
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prior bar’s range). >50% into the prior bar’s range).
 New bar moves in the same direction of  Close may or may not move in the
the prior bar’s direction. direction of the prior bar’s direction.

 New bar’s open and close are near the  New bar’s open and close may not be
near the bar’s extremes.
bar’s extremes.

IntradayMoney.in
 All of the above create uncertainty –
 All of the above create certainty – few
many Gaps, Tails, Engulfing, Piercing , or
Gaps, Tails, Engulfing, Piercing , or Outside
Outside bars.
bars.
 Often, pullbacks break through areas of
 Often, pullbacks reverse in the area of
minor Demand or minor Supply.
minor Demand or minor Supply.
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 Defined: Reference points identifying shifts between the forces of supply and
demand
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 Description: Begin with higher low bars on each side of a bar (low pivot) or
with lower high bars on each side of a bar (high pivot)

 Not until the next bar is complete will you know whether it is a significant pivot
and reference point

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 NOTE: Pivots have varying degrees of significance.

Pivot analysis is the only objective style of

trend analysis and position management!
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 To attain a larger gain in a profitable position, you might have to let the future contract correct.
Doing so may cause you to lose prior gains while attempting to attain a larger one.
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 There’s no way around this. However, the odds are with you if the contract hasn’t yet reached a prior
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area of supply or demand.
 Reference Points of Demand in a Long Position
 Prior bar’s low; after a multi-bar move, exit part of the position under a prior bar’s low
 Prior pivot low
 If a long position is within a price void, hold part of the position, no matter that it violates a prior
bar’s low.
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Let the contract pull back and wait for a pivot to form.
 Once a pivot is formed, bring your stop under that pivot low.
 As a contract moves closer to supply for longs, bring the stop under the prior bar’s low.
 Using two prior pivot lows is an option for a 3-lot exit.