In here, We shall discuss how we can predict today’s day high based on past price action patterns and implications of some other price action methods to make a trading decision.

This discussion happened in Slack’s #daytraders channel on 23th May’20. You can alternatively read the session from this link. (The link will only work if you are a member of Unofficed discord. Use this link to join)

Tradingview

It is a charting platform. It is like next-gen Amibroker but more inclined towards Charting Functionalities rather than Backtesting functions. The core point is – When you post a trade, You can not retract it.

Now, if you have noticed my posting patterns, there is a distinctive nomenclature to each trades.

Let’s start with last trade – in.tradingview.com/chart/JUBLFOOD/NAicYdww-Intraday-Jublfood-Short-Idea-Retest-theory/
You will find many members from Unofficed posting in the same way. Out of the top 50, 30 is from here. We mostly all follow the same or similar theory.

You will find many members from Unofficed posting in the same way. Out of the top 50, 30 is from here. We mostly all follow the same or similar theory.

[Intraday] Jublfood Short Idea -Retest theory

  • It is Intraday trade. Either it will auto square off or hit SL or target. There is no question of taking it to the next day
  • It is based on the Retest theory. In Retest theory which you can see here unofficed.com/go/support-and-resistance ; You will see that it is an Entry strategy.

This course is free actually. You can let me know if you need coupon code to access it. Most of us already have it free. You will find proper videos on entry/exit there with numerous quizzes.

The base of the theory is – “What was support, once broken, should act like resistance and vice versa.” Anyways, Let’s come back to the original discussion – On 18th May, there was a huge breakdown.

You may ask – Why suddenly I looked at Jublfood?
We had JUBLFOOD sold that day on Buddha which was a very good lucky trade for us.

So, the core theory says it will resist there. But it is not strong resistance. It is merely a point where we can bet that “Day’s High” can be created.

It’s all about finding the HP point as we call here. (HP Point means – It is the maximum high point of the day. If you know that, it means it will settle below that point EOD.)

Can you find Day’s High points based on past day’s prices?

The answer is – Yes. But it doesn’t mean 100% times it will work. To make us profitable, it needs to work just more than 50% of the time.

Although the book says, that spot and future should move in sync. In reality, especially in intraday, one can go 3% up and another can do 3% down.

There are n number of reasons for that. In the “equity”, nothing happened in JUBLFOOD much.

  • I entered based on a 5m timeframe based on weekend strategy.
  • The weekend strategy is nothing serious.
  • It is about tracking PCL and PCH.
  • See this huge run?
  • It never broke the Previous candle’s low !!
  • But we follow 15m mostly.
  • When that broke previous candle’s low I just sold it.
  • Now you can see I wrote the target 1603.
  • It went to 1604.15

You can see I have closed near there only (match the times of the screenshot sharing if you want).

The primary question is how I know previously that it will reverse from 1603 dot levels?

Well, 1603 and 1604.15 are almost the same. Let’s keep this question
I exited when I saw it is struggling to break the levels again

See the candle, it is bearish. The marked two candles?

When the next green candle broke it (broke the “body” of the previous candle; not close!), I closed my positions there. It is in an uptrend and We’re shorting uptrend. So exit should be honored.!

These are the things that were going on my head at that time. I was also quite busy stopping my daughter to grab my keyboard as she likes it because my keyboard has lights lol.

Recap:

The rationale of Choice of Scrip :

  • It had results. So I was hoping results exhaustion. It posted good results and it went up. So it needs retracement.
  • The past breaking point from the previous trade.
  • It also looked like proper resistance in smaller TF.

Why sell?

  • Same as previous 1.
  • RBI told Idia is fucked and index was falling.

Entry:

  • Retest Theory
  • Weekend Strategy

Exit:

  • Candlestick Patterns
  • You guess this one

I don’t use any indicator for “entering/exiting the trade”; in rare cases, I do for “trade selection”. Its pure price action (candlesticks), OI (for positional), and theories which I have made on my own and named as my pets…. “3bb” “entropy” ‘brs” “weekend”.

My “Retest Theory” is different than everyone because of the detailed method of “Entry” and “Exit” may vary.

Update: 26th July 20.

Why the Price Action is working?

The market is made of prices. Price is made by people. People follow a herd mentality. That’s why Price action Patterns work of this repetitive nature. Let’s take a recent example of ICICI Bank.

  • The “A” candle’s high is 392.95
  • The “B” candle’s high is 395.65

B candle closed at 392.25 which is below the high price of “A”.

Although it is very easy to see from human eyes. It is extremely hard to formulate into coding – “The thought process of finding this structure.”